Exhibit 2.1
EXECUTION VERSION
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AGREEMENT AND PLAN OF MERGER
among
GMI HOLDING CORPORATION,
GMI MERGER CORPORATION
and
XXXXXXXX XXXXX, INC.
Dated as of February 27, 2004
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TABLE OF CONTENTS
PAGE
ARTICLE I - THE OFFER.......................................................................................3
1.1 The Offer............................................................................................3
1.2 Company Actions......................................................................................5
1.3 Directors of the Company.............................................................................6
1.4 Stockholder Meeting..................................................................................7
1.5 Offer Documents; Schedule 14D-9; Proxy Statement.....................................................8
ARTICLE II - THE MERGER......................................................................................8
2.1 The Merger...........................................................................................8
2.2 Closing..............................................................................................8
2.3 Effective Time.......................................................................................8
2.4 Effects of the Merger................................................................................9
2.5 Certificate of Incorporation and By-laws of the Surviving Corporation................................9
2.6 Directors and Officers of the Surviving Corporation..................................................9
2.7 Conversion of Securities.............................................................................9
2.8 Exchange of Certificates............................................................................10
2.9 Appraisal Rights....................................................................................12
2.10 Company Stock Options...............................................................................12
2.11 Rule 16b-3..........................................................................................13
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................13
3.1 Organization........................................................................................13
3.2 Capitalization......................................................................................14
3.3 Authority...........................................................................................15
3.4 Consents and Approvals; No Violations...............................................................16
3.5 SEC Documents; Undisclosed Liabilities..............................................................16
3.6 Absence of Certain Changes or Events................................................................17
3.7 Legal Proceedings...................................................................................19
3.8 Compliance with Applicable Law; Permits.............................................................19
3.9 Schedule 14D-9; Offer Documents; and Proxy Statement................................................19
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3.10 Tax Matters.........................................................................................20
3.11 Employee Benefits...................................................................................21
3.12 Environmental Matters...............................................................................23
3.13 Insurance...........................................................................................25
3.14 Opinion of Financial Advisor........................................................................25
3.15 Finders or Brokers..................................................................................25
3.16 Certain Matters.....................................................................................25
3.17 No Other Representations or Warranties..............................................................27
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER.........................................27
4.1 Organization........................................................................................27
4.2 Authority...........................................................................................27
4.3 Consents and Approvals; No Violations...............................................................27
4.4 Offer Documents; Schedule 14D-9; Proxy Statement....................................................28
4.5 Ownership and Operations of Purchaser...............................................................29
4.6 Financial Resources.................................................................................29
4.7 Finders or Brokers..................................................................................29
4.8 No Reliance.........................................................................................29
4.9 No Other Representations or Warranties..............................................................29
ARTICLE V - ADDITIONAL COVENANTS AND AGREEMENTS............................................................30
5.1 Conduct of Business.................................................................................30
5.2 Other Offers........................................................................................33
5.3 Reasonable Best Efforts.............................................................................35
5.4 Public Announcements................................................................................37
5.5 Access; Confidentiality.............................................................................38
5.6 Notification of Certain Matters.....................................................................38
5.7 Director and Officer Indemnification and Insurance..................................................38
5.8 Employee Matters....................................................................................40
5.9 Obligations under the Credit Agreement and the Note Agreement.......................................41
5.10 Purchase of Company Debt Prior to the Purchase Date.................................................41
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ARTICLE VI - CONDITIONS TO THE MERGER.......................................................................42
6.1 Conditions to Each Party's Obligation to Effect the Merger..........................................42
ARTICLE VII - TERMINATION....................................................................................42
7.1 Termination.........................................................................................42
7.2 Effect of Termination...............................................................................44
7.3 Termination Fee.....................................................................................45
ARTICLE VIII - MISCELLANEOUS..................................................................................45
8.1 No Survival of Representations and Warranties; etc..................................................45
8.2 Amendment or Supplement.............................................................................45
8.3 Extension of Time, Waiver, Etc......................................................................46
8.4 Assignment; Binding Effect..........................................................................46
8.5 Counterparts; Effectiveness.........................................................................46
8.6 Entire Agreement; No Third-Party Beneficiaries......................................................46
8.7 Governing Law; Enforcement; Jurisdiction; Waiver of Jury Trial......................................47
8.8 Notices.............................................................................................47
8.9 Severability........................................................................................48
8.10 Headings............................................................................................48
8.11 Definitions; Construction...........................................................................49
Annex A Conditions to the Offer
List of Exhibits
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Exhibit 2.5 Form of Certificate of Incorporation and By-laws of the
Surviving Corporation
Company Disclosure Schedule
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Section 3.1(b) Active Subsidiaries
Section 3.2 List of Stock Options
Section 3.2(b) Subsidiaries' Capitalization
Section 3.4(b) No Violations
Section 3.5(a) SEC Documents
Section 3.6 Absence of Certain Changes or Events
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Section 3.7 Legal Proceedings
Section 3.8 Compliance with Applicable Laws; Permits
Section 3.10 Tax Matters
Section 3.11(a) U.S. Benefit Plans
Section 3.11(b) Non-U.S. Benefit Plans
Section 3.11(c) Collective Bargaining Agreements
Section 3.11(f) Certain U.S. Benefit Plans
Section 3.11(g) Labor Representations
Section 3.11(h) Loan to Employees
Section 3.12 Environmental Matters
Section 3.13 Insurance Policies
Section 3.16(a) Certain Matters
Section 3.16(c) Certain Transactions
Section 3.16(e) Intellectual Property
Section 3.16(f) Indebtedness
Section 3.16(f) Restrictions on Movement of Cash
Section 3.16(f) Transaction Expenses
Section 5.1 Conduct of Business
Section 5.1(a)(iv) 2004 Cap Ex Plan
Section 5.1(a)(viii) Increase in Compensation
Section 5.7(a) Indemnification Agreements
Section 5.8(d) Employee Matters
Section 8.11 "knowledge"
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AGREEMENT AND PLAN OF MERGER, dated as of February 27, 2004 (this
"AGREEMENT"), among GMI Holding Corporation, a Delaware corporation ("PARENT"),
GMI Merger Corporation, a Delaware corporation and wholly owned subsidiary of
Parent ("PURCHASER"), and Xxxxxxxx Xxxxx, Inc., a Delaware corporation (the
"COMPANY"). Certain terms used in this Agreement are used as defined in Section
8.11.
WHEREAS, the respective Boards of Directors of Parent, Purchaser and
the Company each deems it advisable that Parent acquire the Company on the terms
and subject to the conditions provided for in this Agreement;
WHEREAS, as a condition and inducement to Parent's and Purchaser's
willingness to enter into this Agreement, simultaneously with the execution of
this Agreement, certain stockholders of the Company have entered into
stockholder support agreements with Parent and Purchaser (the "STOCKHOLDER
SUPPORT AGREEMENTS");
WHEREAS, in furtherance thereof it is proposed that such acquisition
be accomplished by (a) Purchaser commencing a tender offer to purchase all of
the shares of common stock, $0.01 par value, of the Company ("COMPANY COMMON
STOCK") issued and outstanding (each, a "SHARE" and, collectively, the "Shares")
for $19.00 per Share (such amount or any greater amount per Share paid pursuant
to the Offer being hereinafter referred to as the "OFFER PRICE"), subject to any
required withholding of Taxes, net to the seller in cash, on the terms and
subject to the conditions provided for in this Agreement (such cash tender
offer, as it may be amended from time to time as permitted by this Agreement,
the "OFFER"), and (b) following the consummation of the Offer, the merger of
Purchaser with and into the Company, with the Company being the surviving
corporation, in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), pursuant to which Shares (other than certain Shares as
provided in Sections 2.7(a) and (b)) will be converted into the right to receive
the Offer Price, subject to any required withholding of Taxes, on the terms and
subject to the conditions provided for in this Agreement (the "Merger");
WHEREAS, the respective Boards of Directors of Parent (on its own
behalf and as the sole stockholder of Purchaser), Purchaser and the Company have
each approved this Agreement, the Offer and the Merger; and
WHEREAS, as a condition and inducement to the Company's willingness
to enter into this Agreement, Cerberus Capital Management, L.P., on behalf of
one or more of its affiliated funds or managed accounts (the "GUARANTOR" ), has
entered into a letter agreement whereby the Guarantor has agreed to be liable
for the failure by Purchaser to consummate the transactions contemplated by this
Agreement, on the terms and subject to the limitations set forth therein.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and intending to be
legally bound hereby, Parent, Purchaser and the Company hereby agree as follows:
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ARTICLE I - THE OFFER
1.1 The Offer.
(a) Purchaser shall (and Parent shall cause Purchaser to) commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the "EXCHANGE
ACT")) the Offer to purchase all of the Shares at the Offer Price as promptly as
reasonably practicable, but in no event later than five business days after the
public announcement of the execution of this Agreement. The obligation of
Purchaser to accept for payment and pay for Shares tendered pursuant to the
Offer shall be subject only to (x) the satisfaction of the condition that at the
expiration of the Offer there be validly tendered in accordance with the terms
of the Offer and not withdrawn that number of Shares which, when taken together
with Shares (if any) then owned by Parent or any of its subsidiaries, represents
more than 50% of the Shares then outstanding determined on a fully-diluted basis
(on a "FULLY-DILUTED BASIS" meaning the number of Shares then issued and
outstanding plus all shares of Company Common Stock which the Company may be
required to issue as of such date pursuant to options, warrants, convertible
securities or similar obligations then outstanding) (the "MINIMUM CONDITION"),
and (y) the satisfaction (or waiver by Purchaser) of the other conditions set
forth in Annex A hereto. Purchaser expressly reserves the right to waive any of
such conditions to the extent legally permissible (other than the Minimum
Condition), to increase the price per Share payable in the Offer and to make any
other changes in the terms of the Offer; provided, however, that no change may
be made without the prior written consent of the Company which (i) decreases the
price per Share payable in the Offer, (ii) changes the form of consideration to
be paid in the Offer, (iii) reduces the maximum number of Shares sought to be
purchased in the Offer, (iv) imposes conditions to the Offer in addition to the
conditions set forth in Annex A hereto, (v) waives the Minimum Condition, (vi)
modifies or amends any of the conditions set forth in Annex A hereto or makes
other changes in the terms of the Offer that are in any manner adverse to the
holders of Shares or (vii) except as provided below, extends the expiration date
of the Offer.
(b) Notwithstanding the foregoing, Purchaser shall, and Parent shall
cause Purchaser to, (i) extend the Offer beyond the initial scheduled expiration
date, which shall be 20 business days following the date of commencement of the
Offer, or any subsequent scheduled expiration date, if, at the scheduled
expiration of the Offer, any of the conditions to Purchaser's obligation to
accept for payment and to pay for Shares tendered shall not be satisfied or, to
the extent permitted by this Agreement, waived, subject, however, to the
parties' respective rights to terminate this Agreement pursuant to Section 7.1,
and (ii) extend the Offer for any period required by any rule, regulation or
interpretation of the Securities and Exchange Commission (the "SEC") or the
staff thereof applicable to the Offer. Any extension of the Offer pursuant to
clause (i) of the preceding sentence of this Section 1.1(b) shall, subject to
Section 7.1, not exceed the lesser of five business days (or such longer period
as the Company and Purchaser may agree in writing in any particular instance) or
such fewer number of days that Purchaser reasonably believes are necessary to
cause the conditions of the Offer set forth in Annex A hereto to be satisfied.
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In addition, if, at the expiration date of the Offer, all of the conditions to
the Offer have been satisfied (or, to the extent permitted by this Agreement,
waived by Purchaser) but the number of Shares validly tendered and not withdrawn
pursuant to the Offer, when taken together with Shares, if any, then owned by
Parent and its subsidiaries, constitutes less than 90% of the Shares then
outstanding, Purchaser shall (subject to applicable Law) provide for a
"subsequent offering period" (as contemplated by Rule 14d-11 under the Exchange
Act) of at least five but no more than 20 business days after Purchaser's
acceptance for payment of the Shares then tendered and not withdrawn pursuant to
the Offer, in which event Purchaser shall (A) give the required notice of such
subsequent offering period and (B) immediately accept for payment and promptly
pay for all Shares tendered and not withdrawn as of such expiration date.
(c) Subject to the terms of this Agreement and the satisfaction or
earlier waiver of all the conditions of the Offer set forth in Annex A hereto as
of any expiration date of the Offer, Purchaser shall (and Parent shall cause
Purchaser to) accept for payment and pay for all Shares validly tendered and not
withdrawn pursuant to the Offer promptly after it is permitted to do so under
applicable Law (but in no event later than the next business day after such
expiration date of the Offer). On or prior to the date that Purchaser becomes
obligated to pay for Shares pursuant to the Offer, Parent shall provide or cause
to be provided to Purchaser the funds necessary to pay for all Shares that
Purchaser becomes so obligated to pay for pursuant to the Offer. The Offer Price
shall, subject to any required withholding of Taxes, be net to the seller in
cash, upon the terms and subject to the conditions of the Offer.
(d) As promptly as practicable on the date of commencement of the
Offer, Parent and Purchaser shall file with the SEC a Tender Offer Statement on
Schedule TO (together with all amendments, supplements and exhibits thereto, the
"SCHEDULE TO") with respect to the Offer. The Schedule TO shall contain or
incorporate by reference an offer to purchase and forms of the related letter of
transmittal and all other ancillary Offer documents (collectively, together with
all amendments, supplements and exhibits thereto, the "OFFER DOCUMENTS"). Parent
and Purchaser shall cause the Offer Documents to be disseminated to the holders
of the Shares as and to the extent required by applicable federal securities
laws. Parent and Purchaser, on the one hand, and the Company, on the other hand,
shall promptly correct any information provided by it for use in the Offer
Documents if and to the extent that it shall be or shall have become false or
misleading in any material respect, and Parent and Purchaser shall cause the
Offer Documents as so corrected to be filed with the SEC and disseminated to
holders of the Shares, in each case, as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment upon the Offer Documents before they are filed
with the SEC and disseminated to holders of Shares. In addition, Parent and
Purchaser agree to provide the Company and its counsel with any comments,
whether written or oral, that Parent or Purchaser or their counsel may receive
from time to time from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments, to consult with the Company and its
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counsel prior to responding to any such comments and to provide the Company with
copies of all such responses, whether written or oral.
1.2 Company Actions.
(a) As promptly as practicable on the date of commencement of the
Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments, supplements and
exhibits thereto, the "SCHEDULE 14D-9") which, subject to Section 5.2, shall
contain the recommendation of the Board of Directors of the Company referred to
in clause (ii) of Section 3.3(b). The Company shall cause the Schedule 14D-9 to
be mailed to holders of the Shares together with the Offer Documents. The
Company, on the one hand, and each of Parent and Purchaser, on the other hand,
shall promptly correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it shall be or shall have become false or
misleading in any material respect, and the Company shall cause the Schedule
14D-9 as so corrected to be filed with the SEC and disseminated to holders of
the Shares, in each case, as and to the extent required by applicable federal
securities laws. Parent and its counsel shall be given a reasonable opportunity
to review and comment upon the Schedule 14D-9 before it is filed with the SEC
and disseminated to holders of Shares. In addition, the Company agrees to
provide Parent and its counsel with any comments, whether written or oral, that
the Company or its counsel may receive from time to time from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments, to consult with Parent and its counsel prior to responding to any such
comments and to provide Parent with copies of all such responses, whether
written or oral.
(b) The Company shall promptly furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company shall furnish Purchaser with such
additional information, including updated listings and computer files of
stockholders, mailing labels and security position listings, and such other
assistance as Parent, Purchaser or their agents may reasonably require in
communicating the Offer to the record and beneficial holders of Shares. Subject
to the requirements of applicable Law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer or the Merger, Parent and Purchaser shall hold in
confidence pursuant to the Confidentiality Agreement the information contained
in such labels, listings and files, shall use such information solely in
connection with the Offer and the Merger, and, if this Agreement is terminated
in accordance with Section 7.1 or if the Offer is otherwise terminated, shall
promptly deliver or cause to be delivered to the Company all copies of such
information, labels, listings and files then in their possession or control or
in the possession or control of their agents or representatives.
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1.3 Directors of the Company.
(a) Upon the purchase of Shares pursuant to the Offer and for so long
thereafter as Parent and its subsidiaries own in the aggregate more than 50% of
the outstanding Shares, Parent shall be entitled to designate for appointment or
election to the Company's Board of Directors, upon written notice to the
Company, such number of directors, rounded up to the next whole number, as is
equal to the product obtained by multiplying the total number of directors on
such Board (after giving effect to the directors designated by Parent pursuant
to this sentence) by the percentage that the number of Shares so owned by Parent
and its subsidiaries bears to the total number of Shares then outstanding. In
furtherance thereof, the Company shall, upon request of Parent, use its
reasonable best efforts to promptly cause Parent's designees (and any
replacement designees in the event that any designee shall no longer be on such
Board of Directors) to be so appointed or elected to the Company's Board of
Directors and, in furtherance thereof, to the extent necessary, increase the
size of such Board of Directors or use its reasonable best efforts to obtain the
resignation of such number of its directors as is necessary to give effect to
the foregoing provision. At such time, the Company shall also, upon the request
of Parent, use its reasonable best efforts to cause such persons designated by
Parent to constitute at least the same percentage (rounded up to the next whole
number) as is on the Company's Board of Directors of (i) each committee of the
Company's Board of Directors subject to compliance with applicable securities
laws and (ii) each board of directors (or similar body) of each subsidiary of
the Company and each committee of each such board (or similar body).
Notwithstanding the foregoing, until the Effective Time, the Board of Directors
of the Company shall have at least one director who is a director of the Company
on the date of this Agreement and who is not an officer of the Company or any of
its subsidiaries (the "INDEPENDENT DIRECTOR"); provided, however, that (x)
notwithstanding the foregoing, in no event shall the requirement to have at
least one Independent Director result in Parent's designees constituting less
than a majority of the directors on the Company's Board of Directors unless
Parent shall have failed to designate a sufficient number of persons to
constitute at least a majority.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under Section 1.3(a), including mailing to the
Company's stockholders the information required by such Section 14(f) and Rule
14f-1 (which the Company shall mail together with the Schedule 14D-9 if it
receives from Parent and Purchaser the information below on a basis timely to
permit such mailing) as is necessary to fulfill the Company's obligations under
Section 1.3(a). The Company's obligations to appoint Parent's designees to the
Company's Board of Directors pursuant to Section 1.3(a) shall be subject to
compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder and to Parent's compliance with its obligations under the following
sentence. Parent and Purchaser shall supply the Company such information with
respect to Parent and Purchaser and their nominees, officers, directors and
affiliates required by such Section 14(f) and Rule 14f-1 as is necessary in
6
connection with the appointment of any of Parent's designees under Section
1.3(a), and Parent and Purchaser shall be solely responsible for the accuracy
and completeness of such information.
(c) Following the election or appointment of Parent's designees
pursuant to Section 1.3(a) and prior to the Effective Time, the approval by
affirmative vote or written consent of all of the Independent Directors then in
office (or, if there shall be only one Independent Director then in office, the
Independent Director) (the "INDEPENDENT DIRECTOR APPROVAL") shall be required to
authorize (and such authorization shall constitute the authorization of the
Company's Board of Directors and no other action on the part of the Company,
including any action by any other committee thereof or any other director of the
Company, shall, unless otherwise required by applicable Law, be required or
permitted to authorize) (i) any amendment or termination of this Agreement by
the Company, (ii) any extension by the Company of time for performance of any
obligation or action under this Agreement by Parent or Purchaser, (iii) any
waiver, exercise or enforcement of any of the Company's rights under this
Agreement or (iv) any amendment of the certificate of incorporation or by-laws
of the Company.
1.4 Stockholder Meeting.
(a) As promptly as practicable following the purchase of Shares
pursuant to the Offer, if required by applicable Law in order to consummate the
Merger, the Company, acting through its Board of Directors, shall, in accordance
with applicable Law and the Company's certificate of incorporation and by-laws:
(i) (A) duly call, give notice of, convene and hold an
annual or special meeting of the Company's stockholders for the
purposes of obtaining the Stockholder Approval (the "COMPANY
STOCKHOLDERS MEETING"); or (B) at the election of the Company, obtain
the Stockholder Approval by written consent in lieu of a meeting
pursuant to Section 228 of the DGCL; and
(ii) in consultation with Parent, prepare and file with
the SEC a preliminary proxy or information statement relating to the
Merger and this Agreement and obtain and furnish the information
required by the SEC to be included therein and, after consultation
with Parent, respond promptly to any comments made by the SEC with
respect to the preliminary proxy or information statement and cause a
definitive proxy or information statement (together with all
amendments, supplements and exhibits thereto, the "PROXY STATEMENT")
to be mailed to the Company's stockholders at the earliest
practicable date; provided that no amendments or supplements to the
Proxy Statement shall be made by the Company without consultation
with Parent. Parent shall provide the Company with such information
with respect to Parent and its affiliates as shall be required to be
included in the Proxy Statement.
(b) Notwithstanding the provisions of Section 1.4(a), in the event
that Parent, Purchaser and any other subsidiaries of Parent shall acquire in the
aggregate at least 90% of the outstanding Shares pursuant to the Offer or
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otherwise, the parties hereto shall, subject to Article VI, take all necessary
and appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without a meeting of stockholders of the
Company, in accordance with Section 253 of the DGCL.
(c) Each of Parent and Purchaser agrees that it will execute a
written consent or vote, or cause to be voted, all of the Shares acquired in the
Offer or otherwise then owned by it, Purchaser or any of Parent's other
subsidiaries in favor of the adoption of this Agreement.
1.5 Offer Documents; Schedule 14D-9; Proxy Statement. Without
limiting any other provision of this Agreement, whenever any party hereto
becomes aware of any event or change which is required to be set forth in an
amendment or supplement to the Offer Documents, the Schedule 14D-9 and/or the
Proxy Statement, such party shall promptly inform the other parties thereof and
each of the parties shall cooperate in the preparation, filing with the SEC and
(as and to the extent required by applicable federal securities laws)
dissemination to the Company's stockholders of such amendment or supplement.
ARTICLE II - THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, at the Effective Time
Purchaser shall merge with and into the Company, and the separate corporate
existence of Purchaser shall thereupon cease, and the Company shall be the
surviving corporation in the Merger (the "SURVIVING CORPORATION").
2.2 Closing. The closing of the Merger (the "CLOSING") shall take
place at 10:00 a.m. (New York City time) on a date to be specified by the
parties, which date shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article VI (other than
conditions that by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver of such conditions), unless another time or date,
or both, are agreed to in writing by the parties hereto. The date on which the
Closing is held is herein referred to as the "CLOSING DATE". The Closing will be
held at the offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, unless another place is agreed to by the parties hereto.
2.3 Effective Time. Subject to the provisions of this Agreement, on
the Closing Date the parties shall file with the Secretary of State of the State
of Delaware a certificate of merger (or, if applicable, a certificate of
ownership and merger) pursuant to the applicable provisions of the DGCL (the
"CERTIFICATE OF MERGER"), executed in accordance with the relevant provisions of
the DGCL, and shall make all other filings or recordings required under the DGCL
in order to effect the Merger. The Merger shall become effective upon the filing
of the Certificate of Merger or at such other time as is agreed by the parties
hereto and specified in the Certificate of Merger (the time at which the Merger
becomes effective is herein referred to as the "EFFECTIVE TIME").
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2.4 Effects of the Merger. From and after the Effective Time, the
Merger shall have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of the Company and
Purchaser shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Purchaser shall become the debts, liabilities and
duties of the Surviving Corporation.
2.5 Certificate of Incorporation and By-laws of the Surviving
Corporation. The certificate of incorporation and by-laws of the Surviving
Corporation shall be amended at the Effective Time to be in the form of Exhibit
2.5 hereto and, as so amended, such certificate of incorporation and by-laws
shall be the certificate of incorporation and by-laws of the Surviving
Corporation until thereafter amended as provided by law and such certificate of
incorporation and by-laws (and subject to Section 5.7).
2.6 Directors and Officers of the Surviving Corporation. The
directors of Purchaser and the officers of the Company, respectively,
immediately prior to the Effective Time shall be the directors and officers,
respectively, of the Surviving Corporation until their respective successors are
duly elected or appointed and qualified or their earlier death, resignation or
removal in accordance with the certificate of incorporation and by-laws of the
Surviving Corporation.
2.7 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of the holders of any securities of
Purchaser or the Company:
(a) Each issued and outstanding share of capital stock of Purchaser,
and any Share owned by a subsidiary of the Company or a subsidiary of Parent
other than Purchaser, shall be converted into and become one validly issued,
fully paid and nonassessable share of common stock, $.0l par value, of the
Surviving Corporation.
(b) Any Shares that are owned by the Company as treasury stock, and
any Shares owned by Parent or Purchaser, shall be automatically canceled and
retired and shall cease to exist and no consideration shall be delivered in
exchange therefor.
(c) Each issued and outstanding Share (other than (i) Shares to be
converted into common stock of the Surviving Corporation in accordance with
Section 2.7(a), (ii) Shares to be canceled in accordance with Section 2.7(b) and
(iii) any Dissenting Shares), shall be converted into the right to receive an
amount of cash equal to the Offer Price payable to the holder thereof upon
surrender, in the manner provided in this Agreement, of the certificate formerly
representing such Share, without interest (the "MERGER CONSIDERATION"). All such
Shares, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate which immediately prior to the Effective Time represented any
such Shares shall cease to have any rights with respect thereto, except the
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right to receive the Merger Consideration therefor upon the surrender of such
certificate in accordance with this Agreement, without interest.
2.8 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall designate
a bank or trust company reasonably acceptable to the Company to act as agent for
the holders of Shares in connection with the Merger (the "PAYING AGENT") to
receive, on terms reasonably acceptable to the Company, for the benefit of
holders of Shares, the aggregate Merger Consideration to which holders of Shares
shall become entitled pursuant to Section 2.7(c). Parent shall deposit such
aggregate Merger Consideration with the Paying Agent at or prior to the
Effective Time. Such aggregate Merger Consideration deposited with the Paying
Agent shall, pending its disbursement to such holders, be invested by the Paying
Agent in such investments as may be instructed by Purchaser. Parent shall
promptly replace any funds deposited with the Paying Agent lost through any
investment made pursuant to this paragraph.
(b) Exchange Procedures. Promptly after the Effective Time (but in no
event more than three business days thereafter), the Surviving Corporation shall
cause the Paying Agent to mail to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding Shares (the "CERTIFICATES"), whose shares were converted pursuant to
Section 2.7(c) into the right to receive the Merger Consideration, (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent, and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent, together with such letter of transmittal, duly executed and
completed in accordance with the instructions (and such other customary
documents as may reasonably be required by the Paying Agent), the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration, without interest, for each Share formerly represented by such
Certificate, and the Certificate so surrendered shall forthwith be canceled. If
payment of the Merger Consideration is to be made to a Person other than the
Person in whose name the surrendered Certificate is registered, it shall be a
condition of payment that (x) the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and (y) the Person
requesting such payment shall have paid any transfer and other taxes required by
reason of the payment of the Merger Consideration to a Person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such tax either has been paid
or is not applicable. Until surrendered as contemplated by this Section 2.8,
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration as contemplated by
this Article II, without interest.
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(c) Transfer Books; No Further Ownership Rights in Company Stock. The
Merger Consideration paid in respect of Shares upon the surrender for exchange
of Certificates in accordance with the terms of this Article II shall be deemed
to have been paid in full satisfaction of all rights pertaining to the shares of
Company Common Stock previously represented by such Certificates, and at the
close of business on the day on which the Effective Time occurs, the stock
transfer books of the Company shall be closed and thereafter there shall be no
further registration of transfers of shares of Company Common Stock on the
records of the Company. From and after the Effective Time, the holders of
Certificates that evidenced ownership of Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable Law. Subject to Section
2.8(e), if, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article II.
(d) Lost, Stolen or Destroyed Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation, the posting by such Person of a
bond, in such reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with respect to such
Certificate, the Paying Agent will pay, in exchange for such lost, stolen or
destroyed Certificate, the applicable Merger Consideration to be paid in respect
of the Shares formerly represented by such Certificate, as contemplated by this
Article II.
(e) Termination of Fund; No Liability. At any time following the
first anniversary of the Closing Date, the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to it any funds (including any
interest received with respect thereto) that had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look only to the Surviving
Corporation (subject to abandoned property, escheat or other similar laws) as
general creditors thereof with respect to the payment of any Merger
Consideration that may be payable upon surrender of any Certificates held by
such holders, as determined pursuant to this Agreement, without any interest
thereon. Any amounts remaining unclaimed by such holders at such time at which
such amounts would otherwise escheat to or become property of any Governmental
Entity shall become, to the extent permitted by applicable Law, the property of
the Surviving Corporation free and clear of any claims or interest of any Person
previously entitled thereto. Notwithstanding any provision of this Agreement to
the contrary, none of Parent, the Surviving Corporation or the Paying Agent
shall be liable to any Person for Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(f) Withholding Taxes. Parent, Purchaser, the Surviving Corporation
and the Paying Agent shall be entitled to deduct and withhold from the
consideration otherwise payable to a holder of Shares pursuant to the Offer or
Merger such amounts as Parent, Purchaser, the Surviving Corporation or the
Paying Agent is required to deduct and withhold with respect to the making of
11
such payment under the Internal Revenue Code of 1986, as amended (the "CODE"),
or any provision of state, local or foreign tax law. To the extent amounts are
so withheld by Parent, Purchaser, the Surviving Corporation or the Paying Agent,
the withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Shares in respect of which such deduction
and withholding was made.
2.9 Appraisal Rights. Notwithstanding anything in this Agreement to
the contrary, Shares that are issued and outstanding immediately prior to the
Effective Time and which are held by stockholders who did not vote in favor of
the Merger (or consent thereto in writing) and who comply with all of the
relevant provisions of Section 262 of the DGCL (the "DISSENTING STOCKHOLDERS")
shall not be converted into or be exchangeable for the right to receive the
Merger Consideration (the "DISSENTING SHARES"), unless and until the holder or
holders thereof shall have failed to perfect or shall have effectively withdrawn
or lost their rights to appraisal under the DGCL. If any Dissenting Stockholder
shall have failed to perfect or shall have effectively withdrawn or lost such
right, such holder's Shares shall thereupon be treated as if they had been
converted into and become exchangeable for the right to receive, as of the
Effective Time, the Merger Consideration for each such Share, in accordance with
Section 2.7, without any interest thereon. The Company shall give Parent (i)
prompt notice of any written demands for appraisal of any Shares, attempted
withdrawals of such demands and any other instruments served pursuant to the
DGCL and received by the Company relating to stockholders' rights of appraisal,
and (ii) the opportunity to participate in all negotiations and proceedings with
respect to demands for appraisal under the DGCL. The Company shall not, except
with the prior consent of Parent, voluntarily make any payment with respect to,
or settle, or agree to settle, any such demand for payment.
2.10 Company Stock Options. Prior to the Purchase Date, the Company
shall take all actions necessary to provide that each option outstanding
immediately prior to the Purchase Date (whether or not then vested or
exercisable) that represents the right to acquire shares of Company Common Stock
(each, an "OPTION") shall be cancelled and converted at the Purchase Date into
the right to receive from the Company a cash amount equal to the Option
Consideration for each share of Company Common Stock then subject to the Option.
The Option Consideration shall be paid as soon after the Purchase Date as shall
be practicable (but in no event later than the next business day after the
Purchase Date). Notwithstanding the foregoing, the Company shall be entitled to
deduct and withhold from the Option Consideration otherwise payable such amounts
as may be required to be deducted and withheld with respect to the making of
such payment or the vesting of the Option under the Code or any provision of
state, local or foreign tax law. All unexercised Options as of the Purchase Date
that have an exercise price equal to or exceeding the Offer Price on the
Purchase Date shall be immediately cancelled and forfeited. Prior to the
Purchase Date, the Company shall make any amendments to the terms of the Stock
Plans and use its reasonable best efforts to obtain any consents from holders of
Options that, in each case, are necessary to give effect to the transactions
contemplated by this Section 2.10. For purposes of this Agreement, "OPTION
CONSIDERATION" means, with respect to any share of Company Common Stock issuable
12
under a particular Option, an amount equal to the excess, if any, of (i) the
Offer Price per Share over (ii) the exercise price payable in respect of such
share of Company Common Stock issuable under such Option. For purposes of this
Agreement, "STOCK PLANS" shall mean the following plans of the Company: the
Xxxxxxxx Xxxxx, Inc. Stock Option Plan for Nonemployee Directors and the
Xxxxxxxx Xxxxx, Inc. 2003 Stock Option Plan and any other stock option plan,
program or arrangement providing for the issuance or grant of any other interest
in respect of the capital stock or equity of the Company.
2.11 Rule 16b-3. Parent and the Company shall take such steps as may
be reasonably requested by any party hereto to cause dispositions of Company
equity securities (including derivative securities) pursuant to the transactions
contemplated by this Agreement by each individual who is a director or officer
of the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act
and the rules and regulations promulgated thereunder in accordance with that
certain No-Action Letter dated January 12, 1999 issued by the SEC regarding such
matters.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser that,
except as set forth in the disclosure letter delivered by the Company to Parent
simultaneously with the execution of this Agreement (the "COMPANY DISCLOSURE
SCHEDULE"):
3.1 Organization.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the requisite
corporate power and authority necessary to own or lease all of its properties
and assets and to carry on its business as it is now being conducted. The
Company has made available to Parent a complete and correct copy of its
certificate of incorporation and by-laws as amended to date (the "COMPANY
CHARTER DOCUMENTS"). The Company is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets owned
or leased by it makes such licensing or qualification necessary, except where
the failure to be so licensed, qualified or in good standing would not
reasonably be expected to have a Material Adverse Effect (as defined below) on
the Company or would not reasonably be expected to prevent the Company's
performance of its obligations under this Agreement (a "COMPANY MATERIAL ADVERSE
EFFECT"). For purposes of this Agreement, the term "MATERIAL ADVERSE EFFECT"
shall mean, with respect to any party, an effect, event or change which has a
material adverse effect on the assets, liabilities, results of operations or
financial condition of such party and its subsidiaries taken as a whole, other
than effects, events or changes arising out of or resulting from (i) changes in
conditions in the U.S. or global economy or capital or financial markets
generally, including changes in interest or exchange rates, (ii) changes in
general legal, regulatory, political, economic or business conditions or changes
in generally accepted accounting principles, (iii) the identity of Parent or its
affiliates or acts of, or communications by, Parent or its affiliates, including
13
the impact thereof on relationships, contractual or otherwise, with customers,
suppliers, distributors, partners or employees, or (iv) any decline in the
market price, or change in trading volume, of the capital stock of such party or
any failure to meet publicly announced revenue or earnings projections.
(b) Each of the Company's subsidiaries listed on Section 3.1(b) of
the Company Disclosure Schedule (an "ACTIVE SUBSIDIARY") is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has the requisite power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted. The Company has made available to Parent a complete and correct copy
of the certificate of incorporation and by-laws as amended to date (or
comparable documents) of each active subsidiary. Each active subsidiary is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not reasonably be expected to have
a Company Material Adverse Effect. Other than for the active subsidiaries, the
Company does not have any subsidiaries that carry on significant business
activities.
3.2 Capitalization.
(a) The authorized capital stock of the Company consists of
11,000,000 shares of Company Common Stock. At the close of business on February
23, 2004, there were 5,501,053 Shares issued and outstanding, and no Shares were
held by the Company in its treasury. As of February 23, 2004, there were 172,000
shares of Company Common Stock reserved for issuance upon the exercise of
outstanding options under the Stock Plans. All Shares have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights. Except as set forth above or as permitted by Section 5.1, the Company
has not issued any shares of its capital stock, voting securities or equity
interests (other than pursuant to the exercise of outstanding options) or any
options, warrants, convertible or exchangeable securities or rights providing
for the issuance of any shares of capital stock, voting securities or equity
interests of the Company, including any representing the right to purchase
Company Common Stock, phantom stock rights, stock appreciation right or stock
based performance units. Section 3.2(a) of the Company Disclosure Schedule
includes a list of all outstanding options to purchase Company Common Stock and
the related exercise prices thereof.
(b) Except as set forth in Section 3.2(b) of the Company Disclosure
Schedule, (i) the Company owns, directly or indirectly, all of the issued and
outstanding shares of capital stock, voting securities and equity interests of
each of its subsidiaries, free and clear of any liens, pledges, charges or
security interests (except for such transfer restrictions of general
applicability as may be provided under the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder (the "SECURITIES ACT"), and
other applicable securities laws), and all of such shares, securities and
14
interests are duly authorized and validly issued and are fully paid and
nonassessable, (ii) none of the Company or any of its subsidiaries has issued
any outstanding options, warrants, convertible or exchangeable securities,
rights or other agreements providing for the issuance or disposition of any
shares of capital stock, voting securities or equity interests of any subsidiary
of the Company, and (iii) there are no outstanding obligations of the Company or
any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock, voting securities or equity interests (or any options, warrants
or other rights to acquire any shares of capital stock, voting securities or
equity interests) of the Company or any of its subsidiaries.
3.3 Authority.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and, subject to obtaining the approval of its
stockholders to the adoption of this Agreement as contemplated by Section 1.4
(to the extent required by the DGCL), to perform its obligations hereunder and
to consummate the Transactions. The execution, delivery and performance by the
Company of this Agreement, and the consummation by it of the Transactions, have
been duly authorized and approved by its Board of Directors and, except for
obtaining the approval of its stockholders to the adoption of this Agreement as
contemplated by Section 1.4 (to the extent required by the DGCL), no other
corporate action on the part of the Company is necessary to authorize the
execution, delivery and performance by the Company of this Agreement and the
consummation by it of the Transactions. This Agreement has been duly executed
and delivered by the Company and, assuming due authorization, execution and
delivery hereof by the other parties hereto, constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforceability (i) may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, moratorium or other similar laws of
general application affecting or relating to the enforcement of creditors'
rights generally and (ii) is subject to general principles of equity, whether
considered in a proceeding at law or in equity (the "BANKRUPTCY AND EQUITY
EXCEPTION").
(b) The Company's Board of Directors, at a meeting duly called and
held, has duly adopted resolutions (i) determining that the terms of the Offer
and the Merger are fair from a financial point of view to the Company and the
holders of the Shares (ii) approving and declaring advisable this Agreement and
the Transactions and (iii) resolving (subject to Section 5.2) to recommend that
stockholders of the Company accept the Offer, tender their Shares to Purchaser
pursuant thereto and adopt this Agreement. The Company has taken all actions
such that no restrictive provision of Section 203 of the DGCL is, or at the
expiration of the Offer or at the Effective Time will be, applicable to the
Transactions.
(c) The affirmative vote or written consent of the holders of a
majority of the outstanding shares of Company Common Stock in favor of the
adoption of this Agreement (the "STOCKHOLDER APPROVAL") is the only vote or
15
approval of the holders of any class or series of capital stock of the Company
or any of its subsidiaries which is necessary to adopt this Agreement and
approve the Transactions.
3.4 Consents and Approvals; No Violations.
(a) Except for (i) the filing with the SEC of the Schedule 14D-9 and,
if necessary, of the Proxy Statement in definitive form, and other filings
required under, and compliance with other applicable requirements of, the
Exchange Act, (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware pursuant to the DGCL, and (iii) filings required
under, and compliance with other applicable requirements of, non-U.S. Laws
intended to prohibit, restrict or regulate actions or transactions having the
purpose or effect of monopolization, restraint of trade, harm to competition or
effectuating foreign investment (collectively, "FOREIGN ANTITRUST LAWS"), no
consents or approvals of, or filings, declarations or registrations with, any
Governmental Entity are necessary for the consummation by the Company of the
Transactions, other than such other consents, approvals, filings, declarations
or registrations that, if not obtained, made or given, would not reasonably be
expected to have a Company Material Adverse Effect. The foregoing representation
and warranty (to the extent relating to antitrust matters) is made based, in
part, on financial, ownership and other information applicable to Parent and
Purchaser furnished to the Company by Parent.
(b) Except as set forth in Section 3.4(b) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement by the Company
nor the consummation by the Company of the Transactions, nor compliance by the
Company with any of the terms or provisions hereof, will (i) conflict with or
violate any provision of the Company Charter Documents or (ii) assuming that the
authorizations, consents and approvals referred to in Section 3.4(a) (and the
approval of the Company's stockholders contemplated by Section 1.4) are obtained
and the filings referred to in Section 3.4(a) are made, (x) violate any material
Law or any judgment, writ or injunction of any Governmental Entity applicable to
the Company or any of its subsidiaries, or (y) violate, conflict with or
constitute a default (or an event, condition or circumstance which, with notice
or lapse of time, would become a default) under, or give any rights of
termination or cancellation of, or accelerate the performance required by, or
maturity of, or result in the creation of any encumbrance on any assets of the
Company or its subsidiaries pursuant to the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, license, lease, contract,
Permit, franchise, concession or other agreement to which the Company or any of
its subsidiaries is a party, or by which any of their assets are bound, that is
material to the Company and its subsidiaries, taken as a whole.
3.5 SEC Documents; Undisclosed Liabilities.
(a) Except as set forth in Section 3.5(a) of the Company Disclosure
Schedule, the Company has filed all required reports, schedules, forms and
registration, proxy and other statements with the SEC since February 23, 2001
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the "SEC DOCUMENTS"). As of their
16
respective effective dates (in the case of SEC Documents that are registration
statements filed pursuant to the Securities Act) and as of their respective SEC
filing dates (in the case of all other SEC Documents), the SEC Documents
complied in all material respects with the requirements of the Exchange Act and
the Securities Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder, applicable to such SEC Documents, and none of the SEC
Documents as of such respective dates contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The consolidated financial statements of the Company included in
the SEC Documents have been prepared in accordance with GAAP and applicable SEC
accounting rules (except, in the case of unaudited quarterly statements, as
indicated in the notes thereto) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present in
all material respects the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited quarterly statements, to normal year-end audit adjustments).
(c) Neither the Company nor any of its subsidiaries has any material
liabilities of any nature, whether accrued, absolute, contingent or otherwise,
which, if known, would be required to be reflected or reserved against on a
consolidated balance sheet of the Company prepared in accordance with GAAP or
the notes thereto, except liabilities (i) reflected or reserved against on the
balance sheet of the Company and its subsidiaries as of September 28, 2003 (the
"BALANCE SHEET DATE") (including the notes thereto) included in the Company's
Annual Report on Form 10-K for the fiscal year then ended, (ii) incurred after
the Balance Sheet Date in the ordinary course of business, or (iii) under or as
contemplated by or disclosed in this Agreement.
3.6 Absence of Certain Changes or Events. Except (i) as disclosed in
Section 3.6 of the Company Disclosure Schedule, (ii) for the Transactions or
(iii) as permitted by this Agreement, since the Balance Sheet Date, the Company
and its subsidiaries have carried on and operated their respective businesses in
all material respects in the ordinary course of business, and there has not
occurred any:
(a) effect, event or change that would reasonably be expected to have
a Company Material Adverse Effect;
(b) sale, transfer, distribution, abandonment or other disposal of,
or mortgage, pledge or imposition of any encumbrance on any property (including
real estate) or other assets of the Company and its subsidiaries that are
material to the Company and its subsidiaries taken as a whole, except for (i)
sales of inventory in the ordinary course of business, (ii) dispositions of
obsolete or worthless assets in the ordinary course of business, or (iii) the
factoring of accounts receivable in the ordinary course of business pursuant to
17
the agreement between the Company and CIT Commercial Services, as amended and
restated, dated October 1, 2002;
(c) declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any class of
capital stock of the Company, or any repurchase or redemption by the Company or
any of its subsidiaries of any capital stock of the Company;
(d) split, combination or reclassification of any capital stock of
the Company;
(e) change in financial or tax accounting methods, principles or
practices by the Company or its subsidiaries, except insofar as may have been
required by a change in GAAP or applicable Law;
(f) material Tax election or the revocation or change to any material
Tax election inconsistent with past practices or the settlement or compromise of
any material Tax liability;
(g) granting of any increase in compensation by the Company to any
employee of the Company whose compensation in the 2003 fiscal year exceeded
$200,000 (a "COVERED EMPLOYEE")";
(h) granting by the Company to any Covered Employee of any increase
in (or acceleration of vesting or payment of) severance or termination pay,
except as required under any employment, severance or termination agreements set
forth in Section 3.6 of the Company Disclosure Schedule;
(i) entry by the Company into any (or amendment in any material
respect of any existing) employment, severance or termination agreement with any
Covered Employee of the Company;
(j) entry by the Company into any consulting agreement with any
Person involving annual payments in excess of $200,000;
(k) acceleration of the vesting of any option issued by the Company
to acquire Company Common Stock, except as contemplated in this Agreement;
(l) capital expenditures in excess of $500,000 in the aggregate,
except pursuant to the 2004 Cap Ex Plan;
(m) establishment, amendment or termination of any collective
bargaining agreement to which the Company is a party;
(n) acceleration of accounts receivable on an aggregate basis;
18
(o) general delay of payments to vendors or others to whom the
Company owes payments (except for disputed payments);
(p) making of loans to third parties;
(q) settlement of claims involving cash payments in excess of
$250,000 in the aggregate;
(r) acceleration of the payment, right to payment or vesting under
any benefit, retirement, profit sharing or deferred compensation plan or other
compensation arrangement; or
(s) incurrence of indebtedness for borrowed money or guarantee of any
indebtedness for borrowed money (including off balance sheet financing and
factoring), other than indebtedness in amounts not in excess of $2 million in
the aggregate outstanding at any time and guarantees of such indebtedness.
3.7 Legal Proceedings. Except as set forth in Section 3.7 of the
Company Disclosure Schedule, there is neither any pending or, to the knowledge
of the Company, threatened, material legal or administrative proceeding, claim
(including any claim for indemnification under any agreement), suit or action
against the Company or any of its subsidiaries, any of their respective assets
or any of their respective officers or directors in their capacity as such nor
any material injunction, order, judgment, ruling or decree imposed upon the
Company or any of its subsidiaries by any Governmental Entity. The Company has
not received, as of the date hereof, any written notice of any claim that seeks
to prevent the transactions contemplated by this Agreement. Since January 1,
2001, no Governmental Entity has challenged in writing the right of the Company
and its subsidiaries to conduct their business as currently conducted.
3.8 Compliance with Applicable Law; Permits. Except as set forth in
Section 3.8 of the Company Disclosure Schedule, the Company and its subsidiaries
are in compliance in all material respects with all material laws, statutes,
ordinances, codes, rules, regulations, decrees and orders of Governmental
Entities (collectively, "LAWS") applicable to the Company or any of its
subsidiaries. Except as set forth in Section 3.8 of the Company Disclosure
Schedule, the Company and each of its subsidiaries hold all material licenses,
franchises, permits, certificates, approvals and authorizations from
Governmental Entities necessary for the lawful conduct of their respective
businesses (collectively, "PERMITS"). Except as set forth in Section 3.8 of the
Company Disclosure Schedule, the Company and its subsidiaries are in compliance
in all material respects with the terms of all Permits.
3.9 Schedule 14D-9; Offer Documents; and Proxy Statement. Subject to
the accuracy of the representations and warranties of Parent and Purchaser set
forth in Section 4.4, neither the Schedule 14D-9 nor any information supplied
(or to be supplied) in writing by or on behalf of the Company for inclusion in
the Offer Documents will, at the respective times the Schedule 14D-9, the Offer
Documents, or any amendments or supplements thereto, are filed with the SEC or
19
are first published, sent or given to stockholders of the Company, as the case
may be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading. The Proxy Statement (if any) will not, on the date the
Proxy Statement (or any amendment or supplement thereto) is first mailed to
stockholders of the Company, contain any untrue statement of a material fact, or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading and will not, at the time of the Company
Stockholders Meeting (if such a meeting is held), omit to state any material
fact necessary to correct any statement in any earlier communication from the
Company with respect to the solicitation of proxies for the Company Stockholders
Meeting which shall have become false or misleading in any material respect. The
Proxy Statement (if any) and the Schedule 14D-9 will comply as to form in all
material respects with the applicable requirements of the Exchange Act.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to information supplied by or on behalf of Parent or Purchaser for
inclusion in any of the foregoing documents.
3.10 Tax Matters. Except for (i) Taxes for which liability was
discharged as a result of consummation of the Company's Plan of Reorganization
under Chapter 11 of the U.S. Bankruptcy Code (the "Reorganization Plan"), (ii)
items no longer applicable because such items relate to Taxes for which
liability was discharged as a result of consummation of the Reorganization Plan,
and (iii) as set forth on Section 3.10 of the Company Disclosure Schedule: (a)
each of the Company and its subsidiaries has timely filed, or has caused to be
timely filed on its behalf (taking into account any extension of time within
which to file), all federal and state income Tax Returns and other Tax Returns
required to be filed by it that are material individually or in the aggregate,
and all such filed Tax Returns are correct and complete in all material
respects; (b) all Taxes shown to be due on such Tax Returns or that are
otherwise material in amount individually or in the aggregate have been timely
paid; (c) no deficiency or adjustment with respect to Taxes has been proposed,
asserted or assessed against the Company or any of its subsidiaries, which have
not been fully paid or adequately reserved in the Filed SEC Documents; (d)
adequate reserves for Taxes not yet due have been established on the books of
the Company and its subsidiaries in accordance with GAAP; (e) neither the
Company nor any of its subsidiaries has any liability for any Taxes of any
Person other than the Company and its subsidiaries under Treasury Regulation
section 1.1502-6 (or any similar provision of state, local or foreign law) or as
a transferee or successor in interest; (f) there are no outstanding waivers or
agreements extending the statue of limitations for any period with respect to
any Tax to which the Company or any of its subsidiaries may be subject; (g)
neither the Company nor any of its subsidiaries is party to any agreement,
understanding or arrangement (with any Person other than the Company and/or any
of its subsidiaries) relating to allocating or sharing any Taxes, excluding tax
indemnity or allocation provisions contained in real estate and equipment
leases, loan agreements and other similar agreements entered into in the
20
ordinary course of the Company's business; (h) to the knowledge of the Company,
no audit or material claim, dispute, controversy, examination, investigation or
other administrative or court proceedings are pending with any Governmental
Entity with respect to Taxes or Tax Returns of the Company or any of its
subsidiaries, and no written notice thereof has been received; (i) the Shares
are "regularly traded on an established securities market" within the meaning of
Section 1445 of the Code and the Treasury regulations thereunder. For purposes
of this Agreement: (i) "TAXES" shall mean all forms of taxation, whenever
created or imposed, and whether of the United States or elsewhere, and whether
imposed by a local, municipal, governmental, state, foreign, Federal or other
Governmental Entity, or in connection with any agreement with respect to taxes,
including all interest, penalties and additions imposed with respect to such
amounts, and (ii) "TAX RETURNS" shall mean all Federal, state, local, provincial
and foreign tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended tax return relating to Taxes.
3.11 Employee Benefits.
(a) Section 3.11(a) of the Company Disclosure Schedule is a true,
complete and correct list of each "employee benefit plan" (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), and any other material employee plan or agreement, employment
agreement, any severance plan, agreement, program or policies, or consulting
agreements with retained consultants providing for on-going services, maintained
by the Company and its subsidiaries substantially for the benefit of employees
located within the United States for which there may be any current or future
liability (each, a "U.S. BENEFIT PLAN"). The Company has made available to
Parent correct and complete copies of, if applicable, (a) each U.S. Benefit Plan
(or, in the case of any such U.S. Benefit Plan that is unwritten, descriptions
thereof and any amendments thereto), (b) the most recent annual reports on Form
5500 required to be filed with the IRS with respect to each U.S. Benefit Plan
(if any such report was required), (c) the most recent summary plan description
for each U.S. Benefit Plan for which such summary plan description is required
and (d) each trust agreement and insurance or group annuity contract relating to
any U.S. Benefit Plan. Each U.S. Benefit Plan maintained, contributed to or
required to be contributed to by the Company or any of its subsidiaries has been
administered in all material respects in accordance with its terms. The Company,
its subsidiaries and all the U.S. Benefit Plans are all in compliance in all
material respects with the applicable provisions of ERISA, the Code and all
other applicable Laws. To the knowledge of the Company, (i) all U.S. Benefit
Plans that are "employee pension plans" (as defined in Section 3(3) of ERISA)
that are intended to be tax qualified under Section 401(a) of the Code (each, a
"U.S. PENSION PLAN") are so qualified and (ii) no event has occurred since the
date of the most recent determination letter or application therefor relating to
any such U.S. Pension Plan that is reasonably likely to adversely affect the
qualification of such U.S. Pension Plan. The Company has made available to
Parent a correct and complete copy of the most recent determination letter
received with respect to each U.S. Pension Plan, as well as a correct and
complete copy of each pending application for a determination letter, if any.
All contributions, premiums and benefit payments under or in connection with the
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U.S. Benefit Plans that are required to have been made as of the date hereof in
accordance with the terms of the U.S. Benefit Plans have in all material
respects been made or been reflected on the most recent consolidated balance
sheet filed or incorporated by reference into the Filed SEC Documents. No U.S.
Pension Plan sponsored by the Company or any entity, whether or not
incorporated, which is treated as a single employer, or under common control,
with the Company (each an "ERISA AFFILIATE") has an "accumulated funding
deficiency" (as such term is defined in Section 302 of ERISA or Section 412 of
the Code), whether or not waived.
(b) Section 3.11(b) of the Company Disclosure Schedule lists each
material employee benefit plan or agreement maintained by the Company and its
subsidiaries substantially for the benefit of employees located outside the
United States (each, a "NON-U.S. BENEFIT PLAN"). The Company has made available
to Parent correct and complete copies of, if applicable (a) each Non-U.S.
Benefit Plan (or, in the case of any such Non-U.S. Benefit Plan that is
unwritten, descriptions thereof), (b) the most recent annual reports, if any,
required to be filed with the applicable foreign body as required under
applicable foreign law with respect to each Non-U.S. Benefit Plan and (c) the
most recent actuarial report for each Non-U.S. Benefit Plan. Each Non-U.S.
Benefit Plan has been administered in accordance with its terms and in
compliance in all material respects with applicable foreign laws.
(c) Section 3.11(c) of the Company Disclosure Schedule lists each
collective bargaining agreement to which the Company or any of its subsidiaries
is a party with respect to its employees. To the knowledge of the Company, the
Company and its subsidiaries are in compliance in all material respects with all
material laws, regulations and orders relating to the employment of labor.
(d) Neither the Company nor any of its ERISA Affiliates has any
outstanding withdrawal liability in connection with a complete or partial
withdrawal from any multiemployer plan (as defined in Section 4001(a)(3) of
ERISA) (a "Multiemployer Plan"). As of September 30, 2002, the Company had no
estimated withdrawal liability under any Multiemployer Plan.
(e) Within the last twelve months, no reportable event (as defined
under Section 4043(c) of ERISA) has occurred with respect to any U.S. Pension
Plan for which the 30 day notification requirement of 4043(a) has not been
waived by Pension Benefit Guaranty Corporation ("PBGC") regulation.
(f) Except as disclosed on Section 3.11(f) of the Company Disclosure
Schedule, none of the U.S. Benefit Plans which are welfare benefit plans within
the meaning of Section 3(1) of ERISA provide for post-employment health or life
insurance benefits or coverage, except as may be required under Section 4980B of
the Code and at the expense of the participant or the participant's beneficiary.
22
(g) Except as set forth on Section 3.11(g) of the Company Disclosure
Schedule, there are no material pending, or to the Knowledge of the Company,
threatened strikes, work stoppages, slowdowns, lockouts, union organizing
efforts, charges of unfair labor practices, wrongful termination suits, or any
EEOC or other regulatory agency charges, relating to the employment or
termination thereof of any current or former employee of the Company or its
subsidiaries, against the Company or any of its subsidiaries. Within the last
six months, there has been no "mass layoffs" or "plant closings" as defined by
the Worker Adjustment and Retraining Notification Act of 1988 ("WARN") and
neither the Company nor any of its subsidiaries has incurred any liability under
WARN or any similar state statute within the six months prior to the Closing
Date.
(h) All salaries and wages, bonuses and commissions of all directors,
officers or employees of the Company and its subsidiaries have in all material
respects, to the extent due, been paid or discharged in full, including, but not
limited to, all payments due for calendar year 2003 bonuses. Except as set forth
on Section 3.11(h) of the Company Disclosure Schedule, neither the Company nor
its subsidiaries have extended a loan to any employee for which amounts are
outstanding, except for advances in respect of travel and entertainment expenses
in the ordinary course of business. Since December 31, 2002, no such loans have
been forgiven.
3.12 Environmental Matters.
(a) For purposes of this Section 3.12, the following definitions will
apply:
(i) "Environmental Claims" means, with respect to the
Company, any complaint, summons, citation, notice, directive, order,
claim, litigation, investigation, notice of violation, judicial or
administrative proceeding, judgment, letter or other communication
from any governmental agency, department, bureau, office or other
authority, or any third party involving violations of Environmental
Laws from (i) any assets, properties or businesses of the Company or
any predecessor in interest or (ii) from or onto any facilities which
received Hazardous Materials generated by the Company or any
predecessor in interest.
(ii) "Environmental Laws" means any applicable federal,
state, local or municipal laws, statutes, regulations, rules or
ordinances imposing liability or establishing standards of conduct
for protection of the environment, including the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42
U.S.C. 9601 et seq., as amended; the Resource Conservation and
Recovery Act ("RCRA), 42 U.S.C. 6901 et seq., as amended; the Clean
Air Act ("CAA"), 42 U.S.C. 7401 et seq., as amended; and the Clean
Water Act ("CWA"), 33 U.S.C. 1251 et seq., as amended.
(iii) "Environmental Liabilities" means any monetary
obligations, losses, liabilities (including strict liability),
damages, punitive damages, consequential damages, treble damages,
costs and expenses (including all reasonable out-of-pocket fees,
23
disbursements and expenses of counsel, out-of-pocket expert and
consulting fees and out-of-pocket costs for environmental site
assessments, remedial investigation and feasibility studies), fines,
penalties, sanctions and interest to the extent any of the foregoing
are incurred as a result of any Environmental Claim filed by any
Governmental Authority or any third party which relate to any
violations of Environmental Laws, Remedial Actions, Releases or
threatened Releases of Hazardous Materials from or onto (i) any
property presently owned by the Corporation or any of its
subsidiaries or a predecessor in interest, or (ii) any facility which
received Hazardous Materials generated by the Company or any of its
subsidiaries or a predecessor in interest.
(iv) "Hazardous Materials" means, without regard to amount
and/or concentration (a) any element, compound, or chemical that is
defined, listed or otherwise classified as a contaminant, pollutant,
toxic pollutant, toxic or hazardous substances, extremely hazardous
substance or chemical, hazardous waste, biohazardous or infectious
waste, or special waste under Environmental Laws; (b) petroleum,
petroleum-based or petroleum-derived products; (c) polychlorinated
biphenyls; (d) any substance exhibiting a hazardous waste
characteristic including but not limited to corrosivity,
ignitibility, toxicity or reactivity as well as any radioactive or
explosive materials; and (e) asbestos-containing materials.
(v) "Release" means any spilling, leaking, pumping,
emitting, emptying, discharging, injecting, escaping, leaching,
migrating, dumping or disposing of Hazardous Materials (including the
abandonment or discarding of barrels, containers or other closed
receptacles containing Hazardous Materials) into the environment.
(vi) "Remedial Action" means all actions necessary to
attain compliance with Environmental Laws to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate or in any other
way address Hazardous Materials in the indoor or outdoor environment;
(b) prevent or minimize a Release or threatened Release of Hazardous
Materials so they do not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment; (c)
perform pre-remedial studies and investigations and post-remedial
operation and maintenance activities; or (d) any other actions
authorized by 42 U.S.C. 9601.
(b) Except as set forth in Section 3.12 of the Company Disclosure
Schedule and as would not likely result in the Company incurring material
Environmental Liabilities:
(i) The operations of the Company are in compliance with
Environmental Laws in all material respects;
24
(ii) The company has obtained and is in material
compliance with all material and necessary permits or authorizations
that are required under Environmental Laws to operate the facilities,
assets and business of the Company;
(iii) There has been no Release at any of the properties
owned or operated by the Company, or, to the Knowledge of the
Company, at any disposal or treatment facility which received
Hazardous Materials generated by the Company or any predecessor in
interest which is reasonably likely to result in material
Environmental Liabilities;
(iv) No pending or unresolved Environmental Claims have
been asserted against the Company or, to the Knowledge of the
Company, any predecessor in interest, nor does the Company have
notice of any threatened or pending Environmental Claim against the
Company regarding any facilities that may have received Hazardous
Materials generated by the Company or any predecessor in interest
which is reasonably likely to result in material Environmental
Liabilities; and
(v) The Company has made available to Parent and Purchaser
true and complete copies of all material environmental reports,
studies, and investigations regarding any material Environmental
Liabilities of the Company or any material environmental conditions
at any properties owned or operated by the Company which are in the
possession of the Company.
(c) This Section 3.12 constitutes the sole and exclusive
representation and warranty of the Company regarding environmental and health
and safety matters, or liabilities or obligations, or compliance with
Environmental Laws, relating thereto.
3.13 Insurance. Section 3.13 of the Company Disclosure Schedule sets
forth a list of all current insurance policies maintained by the Company and its
subsidiaries (the "Policies"). The Policies have been issued by insurers which,
to the knowledge of the Company, are reputable and financially sound.
3.14 Opinion of Financial Advisor. The Board of Directors of the
Company has received the opinion of Xxxxxxx, Xxxxx & Co., dated the date of this
Agreement, to the effect that, as of such date, and subject to the various
assumptions and qualifications set forth therein, the consideration to be
received by the Company's stockholders in the Offer and the Merger is fair to
such holders from a financial point of view.
3.15 Finders or Brokers. Except for Xxxxxxx, Sachs & Co., whose fees
and expenses will be paid by the Company, no broker, investment banker,
financial advisor or other Person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company or any
of its subsidiaries.
25
3.16 Certain Matters.
(a) As of the date hereof, there are no contracts or agreements
(whether written or oral) to which the Company or any of its subsidiaries is a
party that are required to be described in, or filed as an exhibit to, any SEC
Documents that are not so described or filed as required by the Securities Act
or the Exchange Act, as the case may be, and all contracts requiring payments or
expenditures during the remainder of fiscal year 2004 in excess of $500,000
(other than for the purchase of inventory) are either filed as an exhibit to the
Company's 2003 annual report on Form 10-K or are listed in Section 3.16(a) of
the Company Disclosure Schedule.
(b) The Board of Directors of the Company has taken all necessary
action to ensure that the restrictions on business combinations contained in
Section 203 of the DGCL will not apply to this Agreement, the Offer, the Merger
or the other transactions contemplated by this Agreement.
(c) Except to the extent disclosed in the SEC Documents or as set
forth in Section 3.16(c) of the Company Disclosure Schedule, there are no
transactions, agreements, arrangements or understandings between the Company or
any of its subsidiaries, on the one hand, and the Company's directors, officers,
affiliates (other than wholly-owned subsidiaries of the Company) or other
Persons, on the other hand, that would be required to be disclosed under Item
404 of Regulation S-K under the Securities Act.
(d) The Company and its subsidiaries have good title or valid
leasehold interests in all tangible assets that are material to the operation of
their respective businesses, except for liens granted or permitted pursuant to
the Note Agreement or the Credit Agreement.
(e) Except as set forth in Section 3.16(e) of the Company Disclosure
Schedule, the Company and its subsidiaries own, or otherwise possess valid
licenses or other rights to use, the intellectual property that is material to
and used in connection with their respective businesses.
(f) Section 3.16(f) of the Company Disclosure Schedule sets forth (i)
the Debt of the Company as of February 25, 2004, (ii) the amount of cash on hand
(including cash equivalents) of the Company on a consolidated basis as of the
day prior to the date hereof and (iii) a breakdown of the accounts where such
cash is held in the United States and the United Kingdom as of the day prior to
the date hereof. Except as set forth in Section 3.16(f) of the Company
Disclosure Schedule, there are neither any contractual nor, to the knowledge of
the Company, any legal, regulatory or other restrictions that prohibit the
Company or any of its subsidiaries from transferring cash (or cash equivalents)
between accounts outside of and inside the United States or that limit the
Company's free use of such cash.
(g) Section 3.16(g) of the Company Disclosure Schedule sets forth an
itemized list, prepared in good faith, of the Company's expenses incurred in
connection with the Transactions contemplated by this Agreement, including,
26
without limitation, the fees and expenses of the Company's financial advisors
and outside counsel.
3.17 No Other Representations or Warranties. Except for the
representations and warranties made by the Company in this Article III, the
Company makes no representations or warranties, and the Company hereby disclaims
any other representations or warranties, with respect to the Company, its
subsidiaries, or its or their business, operations, assets, liabilities,
condition (financial or otherwise) or prospects or the negotiation, execution,
delivery or performance of this Agreement by the Company, notwithstanding the
delivery or disclosure to Parent or its Affiliates or representatives of any
documentation or other information with respect to any one or more of the
foregoing.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and warrant to
the Company as follows:
4.1 Organization. Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
4.2 Authority. Each of Parent and Purchaser has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
their respective obligations hereunder and to consummate the Transactions. The
execution, delivery and performance by Parent and Purchaser of this Agreement,
and the consummation by Parent and Purchaser of the Transactions, have been duly
authorized and approved by their respective Boards of Directors and adopted by
Parent as the sole stockholder of Purchaser, and no other corporate action on
the part of Parent and Purchaser is necessary to authorize the execution,
delivery and performance by Parent and Purchaser of this Agreement and the
consummation by them of the Transactions. This Agreement has been duly executed
and delivered by Parent and Purchaser and, assuming due authorization, execution
and delivery hereof by the Company, constitutes a valid and binding obligation
of each of Parent and Purchaser, enforceable against each of them in accordance
with its terms, subject to the Bankruptcy and Equity Exception.
4.3 Consents and Approvals; No Violations.
(a) Except for (i) the filing with the SEC of the Offer Documents
and, if necessary, a Proxy Statement in definitive form, and other filings
required under, and compliance with other applicable requirements of, the
Exchange Act, (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware pursuant to the DGCL and (iii) filings required
under, and compliance with other applicable requirements of Foreign Antitrust
Laws, no consents or approvals of, or filings, declarations or registrations
with, any Governmental Entity are necessary for the consummation by Parent and
27
Purchaser of the Transactions, other than such other consents, approvals,
filings, declarations or registrations that, if not obtained, made or given,
would not reasonably be expected to (A) have a Material Adverse Effect on Parent
or (B) prevent or materially delay Parent's or Purchaser's performance of their
respective obligations under this Agreement ("PARENT MATERIAL ADVERSE EFFECT").
The foregoing representation and warranty (to the extent relating to antitrust
matters) is made based, in part, on financial, ownership and other information
applicable to the Company furnished to Parent and Purchaser by the Company.
(b) Neither the execution and delivery of this Agreement by Parent or
Purchaser, nor the consummation by Parent or Purchaser of the Transactions, nor
compliance by Parent or Purchaser with any of the terms or provisions hereof,
will (i) conflict with or violate any provision of the certificate of
incorporation or bylaws of Parent or Purchaser or (ii) assuming that the
authorizations, consents, approvals and filings referred to in Section 4.3(a)
are obtained and made, (x) violate any Law, judgment, writ or injunction of any
Governmental Entity applicable to Parent or any of its subsidiaries or (y)
violate, conflict with or constitute a default under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, contract or other agreement to which Parent, Purchaser or any of
their respective subsidiaries is a party that is material to Parent and its
subsidiaries, taken as a whole, except, in the case of clause (ii), for such
violations, conflicts and defaults as would not reasonably be expected to have a
Parent Material Adverse Effect.
4.4 Offer Documents; Schedule 14D-9; Proxy Statement. Subject to the
accuracy of the representations and warranties of the Company set forth in
Section 3.9, neither the Offer Documents nor any information supplied (or to be
supplied) in writing by or on behalf of Parent or Purchaser for inclusion in the
Schedule 14D-9 will, at the respective times the Offer Documents, the Schedule
14D-9, or any amendments or supplements thereto, are filed with the SEC or are
first published, sent or given to stockholders of the Company, as the case may
be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading. The information supplied by Parent for inclusion in the
Proxy Statement (if any) will not, on the date the Proxy Statement (or any
amendment or supplement thereto) is first mailed to stockholders of the Company,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading, and will not, at the time of the Company Stockholders Meeting (if
such a meeting is held), omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholders Meeting which shall have become false or
misleading in any material respect. The Offer Documents will comply as to form
in all material respects with the applicable requirements of the Exchange Act.
Notwithstanding the foregoing, Parent and Purchaser make no representation or
28
warranty with respect to any information supplied by or on behalf of the Company
for inclusion in any of the foregoing documents.
4.5 Ownership and Operations of Purchaser. Parent beneficially owns
all of the outstanding capital stock of Purchaser. Purchaser was formed solely
for the purpose of engaging in the Transactions, has engaged in no other
business activities and had conducted its operations only as contemplated
hereby.
4.6 Financial Resources. Parent and Purchaser collectively have, and
will have at the dates that Purchaser becomes obligated to accept for payment
and pay for Shares pursuant to the Offer, and at the Effective Time, sufficient
cash resources available to pay: (a) for the Shares that Purchaser becomes so
obligated to accept for payment and pay for pursuant to the Offer; (b) the
aggregate Merger Consideration pursuant to the Merger; (c) the aggregate Option
Consideration pursuant to Section 2.10; (d) any and all amounts due and payable
under Section 7.3 or any other provision of the Note Agreement as a result of
the consummation of any of the Transactions; (e) any and all amounts due and
payable if an Event of Default (as defined in the Credit Agreement) is deemed to
exist under Article 7 of the Credit Agreement because consents to the
Transactions by the Required Lenders (as defined in the Credit Agreement) shall
not have been obtained; and (f) all fees and expenses payable by them in
connection with the Transactions.
4.7 Finders or Brokers. Except for Rothschild Inc., whose fees and
expenses will be paid by Parent, no broker, investment banker, financial advisor
or other Person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of Parent or any of its subsidiaries.
4.8 No Reliance. Parent and Purchaser acknowledge and agree that they
have not been induced by and have not relied upon any representations,
warranties or statements, whether express or implied, made by the Company or any
of its Affiliates or any Person representing or purporting to represent the
Company that are not expressly set forth in this Agreement, whether or not any
such representations, warranties or statements were made in writing or orally.
4.9 No Other Representations or Warranties. Except for the
representations and warranties made by Parent and Purchaser in this Article IV,
Parent and Purchaser make no representations or warranties, and Parent and
Purchaser hereby disclaim any other representations or warranties, with respect
to Parent and Purchaser, their subsidiaries, or their business, operations,
assets, liabilities, condition (financial or otherwise) or prospects or the
negotiation, execution, delivery or performance of this Agreement by Parent and
Purchaser, notwithstanding the delivery or disclosure to the Company or its
Affiliates or representatives of any documentation or other information with
respect to any one or more of the foregoing.
29
ARTICLE V - ADDITIONAL COVENANTS AND AGREEMENTS
5.1 Conduct of Business. (a) Except as (I) permitted by this
Agreement, (II) required by applicable Law or (III) set forth in Section 5.1 of
the Company Disclosure Schedule, during the period from the date of this
Agreement until the Purchase Date, unless Parent otherwise consents in writing
(x) the Company shall, and shall cause each of its subsidiaries to, conduct its
business in all material respects in the ordinary course, (y) the Company shall
use its commercially reasonable efforts to preserve the current relationships of
the Company and its subsidiaries with their respective customers, vendors,
suppliers and other persons with which they have business relationships and (z)
the Company shall not, and shall not permit any of its subsidiaries to:
(i) (A) issue, sell or grant any shares of its capital
stock, voting securities or equity interests, or any securities or
rights convertible into, exchangeable or exercisable for, or
evidencing the right to subscribe for any shares of its capital
stock, voting securities or equity interests, or any warrants,
options or rights to purchase or acquire any shares of its capital
stock, voting securities or equity interests or any securities or
rights convertible into, exchangeable or exercisable for, or
evidencing the right to subscribe for, any shares of its capital
stock, voting securities or equity interests, provided that (x) the
Company may issue shares of Company Common Stock upon the exercise of
options that are outstanding on the date hereof and (y) capital
stock, voting securities or equity interests of the Company's
subsidiaries may be (1) issued to the Company or a direct or indirect
wholly owned subsidiary of the Company and (2) pledged to the extent
required under the Credit Agreement, Note Agreement or any
replacement thereof; (B) redeem, purchase or otherwise acquire any
outstanding shares of capital stock, voting securities or equity
interests of the Company, or any warrants, options or rights to
acquire any shares of capital stock, voting securities or equity
interests of the Company, (C) declare, set aside for payment or pay
any dividend on, or make any other distribution in respect of, any
shares of capital stock of the Company; (D) split, combine, subdivide
or reclassify any shares of capital stock of the Company; or (E)
amend in any material respect or waive any of its material rights
under, or accelerate the vesting under, any provision of the Stock
Plans or any agreement evidencing any outstanding option or other
right to acquire capital stock of the Company or any restricted stock
purchase agreement or any related contract;
(ii) incur any indebtedness for borrowed money or
guarantee any such indebtedness (including factoring or off balance
sheet financing), other than borrowings from the Company by a direct
or indirect wholly owned subsidiary of the Company;
(iii) sell, lease or dispose of any properties or assets
that are material to the Company and its subsidiaries, taken as a
whole, to any Person (other than to the Company or a direct or
indirect wholly owned subsidiary of the Company), except (A) sales of
30
inventory in the ordinary course of business, (B) dispositions of
obsolete or worthless assets in the ordinary course of business, or
(C) factoring of accounts receivable pursuant to the agreement
between the Company and CIT Commercial Services, as amended and
restated, dated October 1, 2002;
(iv) make capital expenditures, except capital
expenditures (A) made pursuant to the Company's capital expenditure
plan for the 2004 fiscal year set forth in Section 5.1(a)(iv) of the
Company Disclosure Schedule (the "2004 CAP EX PLAN") and (B) not in
excess of $300,000 individually, or $1,600,000 in the aggregate, for
the Company and its subsidiaries taken as a whole during any month,
provided that Parent shall not unreasonably withhold its consent with
respect to the making of any capital expenditures in excess of the
limitations set forth above;
(v) make investments in or acquisitions (by purchase of
securities or assets, merger or consolidation, or otherwise) of other
Persons, businesses or divisions thereof;
(vi) make loans or advances (other than travel and similar
advances to its employees, and trade credit to customers, in the
ordinary course of business) to any Person other than the Company or
a direct or indirect wholly owned subsidiary of the Company;
(vii) (A) enter into, terminate or amend in any material
respect any contract or agreement that is material to the Company and
its subsidiaries taken as a whole, or (B) enter into or extend the
term or scope of any contract or agreement that purports to restrict
the Company or any subsidiary from engaging in any line of business
or in any geographic area;
(viii) increase the compensation of any of its directors,
Covered Employees or other employees or enter into, establish or
amend in any material respect any employment, retention, change in
control, collective bargaining, bonus or other incentive
compensation, profit sharing, health or other welfare, stock option
or other equity (or equity-based), pension, retirement, vacation,
severance, deferred compensation or other compensation or benefit
plan, policy, agreement, trust, fund or arrangement with, for or in
respect of, any director, executive officer or employee, other than
(A) as required pursuant to applicable Law or the terms of agreements
or commitments in effect as of the date hereof and listed in Section
5.1(a)(viii) of the Company Disclosure Schedule and (B) increases
which are not applicable to employees generally in salaries, wages
and benefits of employees (other than Covered Employees) made in the
ordinary course of business;
(ix) make, revoke or change any material Tax election or
settle or compromise any material Tax liability, other than an
election not to have Section 382(l)(5) of the Code apply;
31
(x) make any changes in financial or tax accounting
methods, principles or practices, except insofar as may be required
by a change in GAAP or applicable Law;
(xi) amend the Company Charter Documents;
(xii) adopt a plan or agreement of complete or partial
liquidation, dissolution, restructuring, recapitalization, merger,
consolidation or other reorganization (other than (A) mergers or
acquisitions permitted under clause (v) above or (B) transactions
exclusively among the Company and wholly owned subsidiaries of the
Company);
(xiii) settle or compromise any litigation or proceeding
(A) involving a cash payment of the Company or any of its
subsidiaries of an amount in excess of $100,000 or (B) relating to
any of the Transactions; or
(xiv) agree, in writing or otherwise, to take any of the
foregoing actions or take any action or agree, in writing or
otherwise, to take any action, which would cause the condition in
paragraph (b) of Annex A not to be satisfied;
(xv) accelerate accounts receivable on an aggregate basis;
(xvi) delay payments to vendors or others to whom the
Company owes payments on a general basis (except for disputed
payments);
(xvii) renew, extend or modify real estate leases; or
(xviii) create, or otherwise agree to, any restrictions on
the ability of the Company or any of its subsidiaries to transfer
cash (or cash equivalents) between accounts outside of and inside the
United States or on the free use of such cash.
(b) Parent agrees that, during the period from the date of this
Agreement until the Effective Time, except as expressly contemplated or
permitted by this Agreement or as required by applicable Law, and except as may
be agreed in writing by the Company, Parent shall not, and shall not permit any
of its subsidiaries to, take any action or agree, in writing or otherwise, to
take any action which would cause any of the representations or warranties of
Parent or Purchaser set forth in this Agreement (A) that are qualified as to
materiality or Material Adverse Effect to be untrue and (B) that are not so
qualified to be untrue in any material respect. In addition, Parent shall not,
and shall not permit any of its subsidiaries to, acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial portion of the
assets of or equity in, or by any other manner, any Person or portion thereof,
or otherwise acquire or agree to acquire any assets, if the entering into of a
definitive agreement relating to or the consummation of such acquisition, merger
or consolidation would reasonably be expected to (i) impose any material delay
in the obtaining of, or significantly increase the risk of not obtaining, any
authorizations, consents, orders, declarations or approvals of any Governmental
32
Entity necessary to consummate the Transactions or the expiration or termination
of any applicable waiting period, (ii) significantly increase the risk of any
Governmental Entity entering an order prohibiting the consummation of the
Transactions or (iii) materially delay the consummation of the Transactions.
(c) The Company shall give Purchaser notice of any effect, event or
change which would reasonably be expected to have a Company Material Adverse
Effect.
5.2 Other Offers.
(a) The Company shall cease, and shall cause its subsidiaries to
cease and use its reasonable best efforts to cause the Company's and its
subsidiaries' respective directors, officers, employees, investment bankers and
other representatives to cease, any discussions or negotiations with any Person
that may be ongoing as of the date of this Agreement with respect to a Takeover
Proposal. The Company shall not, and shall cause its subsidiaries not to and
shall use its reasonable best efforts to cause the Company's and its
subsidiaries' respective directors, officers, employees, investment bankers and
other representatives not to, (i) solicit, initiate or knowingly encourage
(including by way of furnishing information) the initiation of any Takeover
Proposal or (ii) participate in any discussions with any third party regarding,
or furnish to any third party any non-public information in connection with, any
Takeover Proposal. Notwithstanding the foregoing, the Board of Directors of the
Company and its representatives may in any event (x) have discussions with any
Person that has made an unsolicited Takeover Proposal solely in order to clarify
and understand the terms and conditions of such proposal pursuant to a
confidentiality agreement with such Person on terms and conditions no more
favorable to such Person than those contained in the Confidentiality Agreement
(and the Company shall provide Parent and Purchaser with the same waivers of,
and modifications to, the Confidentiality Agreement as those made available to
any other Person) if the Board of Directors of the Company, after consultation
with a legal advisor of national reputation, determines in good faith that it is
necessary to take such action to comply with its fiduciary duties under
applicable Law, and (y) if the Board of Directors of the Company receives an
unsolicited Takeover Proposal that the Board of Directors of the Company, after
consulting with a legal advisor of national reputation and with a financial
advisor of national reputation, determines in good faith constitutes or is
reasonably likely to lead to a Superior Proposal and that it is necessary to
take the following actions to comply with its fiduciary duties under applicable
Law, then the Company may (A) furnish non-public information to the Person
making such Takeover Proposal and (B) participate in discussions and
negotiations with such Person regarding a Takeover Proposal, in each case
pursuant to a confidentiality agreement with such Person on terms and conditions
no more favorable to such Person than those contained in the Confidentiality
Agreement (and the Company shall provide Parent and Purchaser with the same
waivers of, and modifications to, the Confidentiality Agreement as those made
available to any other Person).
33
(b) Except as expressly permitted by this Section 5.2(b), neither the
Board of Directors of the Company nor any committee thereof shall (i)(A)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Parent, the approval by such Board of Directors described in clause
(ii) of Section 3.3(b) or the recommendation by such Board of Directors
described in clause (iii) of Section 3.3(b) or (B) approve or recommend, or
propose publicly to approve or recommend, any Takeover Proposal or (ii) cause or
authorize the Company or any of its subsidiaries to enter into any contract or
agreement (other than a confidentiality agreement) with respect to a Takeover
Proposal (a "COMPANY ACQUISITION AGREEMENT"). Notwithstanding the foregoing the
Board of Directors of the Company may withdraw or modify its recommendation
described in clause (ii) of Section 3.3(b) if the Board determines in good
faith, after reviewing applicable provisions of state law and after consulting
with a legal advisor of national reputation, that such action is necessary for
the Board of Directors to comply with its fiduciary duties under applicable Law.
In addition, subject to compliance with the Company's obligations under Section
5.2(a), if the Board of Directors of the Company receives a Takeover Proposal
that it determines in good faith, after consultation with a legal advisor of
national reputation and a financial advisor of national reputation, constitutes
a Superior Proposal and that it is necessary to take the following actions to
comply with its fiduciary duties under applicable Law, the Board of Directors of
the Company may enter into a Company Acquisition Agreement with respect to such
Superior Proposal if (I) the Company provides written notice to Parent, which
notice must be received by Parent at least three business days (inclusive of the
day of receipt by Parent of such notice) prior to the time it intends to cause
the Company to enter into such Company Acquisition Agreement, advising Parent
that the Board of Directors of the Company has received a Takeover Proposal
which it believes constitutes a Superior Proposal and intends to accept and,
with respect to which, enter into a Company Acquisition Agreement, subject to
the provisions of this Section 5.2(b), providing a copy of any written offer or
proposal describing the Superior Proposal and identifying the Person making such
Superior Proposal, (II) as of the end of such three business day period
referenced above, Parent shall have failed to revise the terms of the Offer and
the Merger to an extent necessary to cause the Board of Directors to change its
determination that such Takeover Proposal continues to be a Superior Proposal,
and (III) the Company terminates this Agreement pursuant to Section 7.1(c)(ii)
within three business days after the lapse of the three business day period
referenced above, concurrently enters into a Company Acquisition Agreement with
respect to such Superior Proposal and pays the Termination Fee to Parent in
accordance with Section 7.3(b).
(c) For purposes of this Agreement:
"TAKEOVER PROPOSAL" means any inquiry, proposal or offer
from any Person (other than Parent and its subsidiaries) relating to
any (A) direct or indirect acquisition (whether in a single
transaction or a series of related transactions) of assets of the
Company and its subsidiaries (including securities of subsidiaries,
but excluding sales of assets in the ordinary course of business)
equal to 20% or more of the Company's consolidated assets or to which
34
20% or more of the Company's revenues or earnings on a consolidated
basis are attributable, (B) direct or indirect acquisition (whether
in a single transaction or a series of related transactions) of 20%
or more of any class of equity securities of the Company, (C) tender
offer or exchange offer that if consummated would result in any
Person beneficially owning 20% or more of any class of equity
securities of the Company or (D) merger, consolidation, share
exchange, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or involving
any subsidiary (or subsidiaries) or any assets of the Company and its
subsidiaries equal to 20% or more of the Company's consolidated
assets or to which 20% or more of the Company's revenues or earnings
on a consolidated basis are attributable; in each case, other than
the Transactions.
"SUPERIOR PROPOSAL" means a proposal to acquire, directly
or indirectly, for consideration consisting of cash and/or
securities, more than 50% of any class of equity securities of the
Company or a substantial portion of the assets (which may include
securities of subsidiaries) of the Company and its subsidiaries on a
consolidated basis, made by a third party, which is on terms and
conditions which the Board of Directors of the Company determines in
its good faith and reasonable judgment (after consultation with a
financial advisor of national reputation) to be more favorable to the
Company's stockholders from a financial point of view than the
Transactions, taking into account at the time of determination the
ability of the Person making such proposal to consummate the
transactions contemplated by such proposal (based upon, among other
things, the availability of financing and the expectation of
obtaining required approvals).
(d) Nothing in this Section 5.2 shall prohibit the Board of Directors
of the Company from taking and disclosing to the Company's stockholders a
position contemplated by Rule 14e-2(a) or Item 1012(a) of Regulation M-A under
the Exchange Act if such Board determines in good faith, after consultation with
outside counsel, that failure to so disclose such position could constitute a
violation of applicable Law. In addition, it is understood and agreed that, for
purposes of this Agreement (including Sections 5.2(b) and 7.1(d)), a factually
accurate public statement by the Company that describes the Company's receipt of
a Takeover Proposal and the operation of this Agreement with respect thereto
shall not be deemed a withdrawal or modification, or proposal by the Board of
Directors of the Company to withdraw or modify, such Board's recommendation of
this Agreement or the Transactions, or a recommendation with respect to such
Takeover Proposal.
5.3 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, the
Company and Parent shall each cooperate with the other and use (and shall cause
their respective subsidiaries to use) their respective reasonable best efforts
to promptly (i) take or cause to be taken all actions, and do or cause to be
done all things, necessary, proper or advisable under this Agreement and
applicable Laws to consummate the Transactions as soon as practicable, including
35
preparing and filing promptly and fully all documentation to effect all
necessary filings, notices, petitions, statements, registrations, submissions of
information, applications and other documents (including any required or
recommended filings under applicable Antitrust Laws), (ii) obtain all approvals,
consents, registrations, permits, authorizations and other confirmations from
any Governmental Entity or third party necessary, proper or advisable to
consummate the Transactions and (iii) use its reasonable best efforts to (x)
take all action necessary to ensure that no state takeover statute or similar
Law is or becomes applicable to any of the Transactions and (y) if any state
takeover statute or similar Law becomes applicable to any of the Transactions,
take all action necessary to ensure that the Transactions may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise minimize the effect of such Law on the Transactions. Subject to
applicable Laws relating to the exchange of information and in addition to
Section 5.3(c), the Company and Parent shall have the right to review in
advance, and to the extent practicable each will consult the other on, all the
information relating to the Company and its subsidiaries or Parent and its
subsidiaries, as the case may be, that appears in any filing made with, or
written materials submitted to, any third party and/or any Governmental Entity
in connection with the Transactions. For purposes hereof, "ANTITRUST LAWS" means
the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, all applicable Foreign Antitrust Laws
and all other applicable Laws issued by a Governmental Entity that are designed
or intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade or lessening of competition
through merger or acquisition.
(b) In furtherance and not in limitation of the foregoing, each party
hereto agrees to make appropriate filings under Foreign Antitrust Laws as
promptly as practicable, but in no event later than the date required, and to
supply as promptly as practicable any additional information and documentary
material that may be required in connection therewith. The Company and Parent
shall each use its reasonable best efforts to (x) take all action necessary to
ensure that no state takeover statute or similar Law is or becomes applicable to
any of the Transactions and (y) if any state takeover statute or similar Law
becomes applicable to any of the Transactions, take all action necessary to
ensure that the Transactions may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise minimize the effect of
such Law on the Transactions.
(c) Each of Parent and the Company shall use its reasonable best
efforts to (i) cooperate in all respects with each other in connection with any
filing or submission with a Governmental Entity in connection with the
Transactions and in connection with any investigation or other inquiry by or
before a Governmental Entity relating to the Transactions, including any
proceeding initiated by a private party, and (ii) keep the other party informed
in all material respects and on a reasonably timely basis of any material
communication received by such party from, or given by such party to any
Governmental Entity and of any material communication received or given in
36
connection with any proceeding by a private party, in each case regarding any of
the Transactions.
(d) In furtherance and not in limitation of the covenants of the
parties contained in this Section 5.3, each of Parent and the Company shall use
its reasonable best efforts to resolve such objections, if any, as may be
asserted by a Governmental Entity or other Person with respect to the
Transactions. Without limiting any other provision hereof, Parent and the
Company shall each use its reasonable best efforts to (i) avoid the entry of, or
to have vacated or terminated, any decree, order or judgment that would
restrain, prevent or delay the consummation of the Transactions, on or before
the Walk-Away Date, including by defending through litigation on the merits any
claim asserted in any court by any Person, and (ii) avoid or eliminate each and
every impediment under any Antitrust Law that may be asserted by any
Governmental Entity with respect to the Transactions so as to enable the
consummation of the Transactions to occur as soon as reasonably possible (and in
any event no later than the Walk-Away Date) including, with respect to Parent,
Parent shall take all such actions, including (y) proposing, negotiating,
committing to and effecting, by consent decree, hold separate order, or
otherwise, the sale, divestiture or disposition of such assets or businesses of
Parent (or any of its subsidiaries) and (z) otherwise taking or committing to
take actions that limit Parent or its subsidiaries' freedom of action with
respect to, or its ability to retain, one or more of its or its subsidiaries'
businesses, product lines or assets, in each case, as may be required in order
to avoid the entry of, or to effect the dissolution of, any injunction,
temporary restraining order, or other order in any suit or proceeding, which
would otherwise have the effect of preventing or materially delaying the
consummation of the Transactions; provided, however, that Parent shall not be
required to take any such actions which would, individually or in the aggregate,
reasonably be expected to have a material adverse impact on Parent or its
affiliates (including for this purpose the Surviving Corporation as subsidiary
of Parent). The Company shall take such of the foregoing actions as Parent may
request; provided that any such action is conditioned upon the consummation of
the Merger.
(e) Financing. Upon the written request of Parent, the Company shall
use its commercially reasonable efforts to cooperate with and assist Parent in
obtaining third-party financing to pay or refinance all or a portion of the
financing for the Transactions contemplated hereby, including all amounts due or
to become due under the Note Agreement and Credit Agreement. The Company shall
use its commercially reasonable efforts to cause its auditors to continue to
provide executed audit opinions for prior periods following the Purchase Date.
5.4 Public Announcements. The initial press release with respect to
the execution of this Agreement shall be a joint press release to be reasonably
agreed upon by Parent and the Company. Thereafter, neither the Company nor
Parent shall, without the prior consent of the other party (which consent shall
not be unreasonably withheld or delayed), issue or cause the publication of any
press release or other public announcement (to the extent not previously issued
or made in accordance with this Agreement) with respect to the Offer, the
Merger, this Agreement or the other Transactions, except for any such press
37
release or public announcement as may be required by Law as determined in the
good faith judgment of the party proposing to make such release or announcement
(in which case the party proposing to make such release or announcement shall,
to the extent practicable, consult with the other party prior to making such
release or announcement). Notwithstanding the forgoing, the provisions of this
Section 5.4 shall be subject to Section 5.5(b).
5.5 Access; Confidentiality. Upon reasonable notice and subject to
applicable Laws relating to the exchange of information, the Company shall, and
shall cause each of its subsidiaries to, afford to the officers, employees and
other representatives of Parent, during normal business hours during the period
prior to the Effective Time, reasonable access to its properties, books,
contracts, commitments and records, and to its officers, employees and other
representatives and, during such period, the Company shall, and shall cause its
subsidiaries to, make available to Parent (a) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of Federal securities laws and (b) all other
information concerning its business, properties and personnel as Parent may
reasonably request; provided that the Company shall not be obligated to provide
such access or information to the extent the Company determines, in its
reasonable judgment, that doing so would jeopardize the protection of an
attorney-client privilege. Until the Effective Time, the information provided
will be (i) used solely in connection with the Transactions and (ii) subject to
the terms of the Confidentiality Agreement dated as November 25, 2003 between
Parent and Xxxxxxx, Xxxxx & Co. (the "CONFIDENTIALITY AGREEMENT").
5.6 Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) any
notice or other communication received by such party from any Governmental
Entity in connection with the Transactions or from any Person alleging that the
consent of such Person is or may be required in connection with the
Transactions, and (ii) any actions, suits, claims, investigations or proceedings
commenced or, to such party's knowledge, threatened against, relating to or
involving or otherwise affecting such party or any of its subsidiaries which
relate to the Transactions.
5.7 Director and Officer Indemnification and Insurance.
(a) From and after the Purchase Date, the Surviving Corporation
shall, and Parent shall cause the Surviving Corporation to, assume all
obligations of the Company, and cause its subsidiaries to maintain in effect all
such obligations owed by them, to each individual who at the Effective Time is,
or any time prior to the Effective Time was, a director, officer or employee of
the Company or any of its subsidiaries (the "INDEMNITEES") in respect of
indemnification and exculpation from liabilities for acts or omissions occurring
at or prior to the Effective Time as provided in (x) the Company Charter
Documents (or predecessor documents) and the organizational documents of such
subsidiaries as currently in effect and (y) the indemnification agreements
listed on Section 5.7(a) of the Company Disclosure Schedule, which shall survive
the Merger and continue in full force and effect in accordance with their
38
respective terms. Without limiting the foregoing, Parent, from and after the
Effective Time, shall cause the certificate of incorporation and by-laws of the
Surviving Corporation and its subsidiaries to contain provisions no less
favorable to the Indemnitees with respect to limitation of liabilities of
directors and officers and indemnification than are set forth as of the date of
this Agreement in the Company Charter Documents, which provisions shall not be
amended, repealed or otherwise modified in a manner that would adversely affect
the rights thereunder of the Indemnitees. In addition, the Surviving Corporation
shall, and Parent shall cause the Surviving Corporation to, pay any expenses
(including fees and expenses of legal counsel) of any Indemnitee in connection
with enforcing the indemnity and other obligations provided for in this Section
5.7 as incurred to the fullest extent permitted under applicable Law, provided
that the person to whom expenses are advanced provides an undertaking to repay
such advances to the extent required by applicable Law.
(b) Following the Purchase Date, the Surviving Corporation shall, and
Parent shall cause the Surviving Corporation to, use its commercially reasonable
efforts to purchase a six-year "tail" with respect to the Company's existing
current directors' and officers' liability insurance covering acts or omissions
occurring at or prior to the Effective Time with respect to those persons who
are currently (and any additional persons who prior to the Effective Time
become) covered by the Company's directors' and officers' liability insurance
policy on terms with respect to such coverage, and in amount, not less favorable
to such persons than those of such policy in effect on the date hereof. In the
event that the Surviving Corporation does not purchase the "tail" referred to in
the immediately preceding sentence, then, for the six-year period commencing
immediately after the Purchase Date, the Surviving Corporation shall maintain in
effect the Company's current directors' and officers' liability insurance
covering acts or omissions occurring at or prior to the Effective Time with
respect to those persons who are currently (and any additional persons who prior
to the Effective Time become) covered by the Company's directors' and officers'
liability insurance policy on terms with respect to such coverage, and in
amount, not less favorable to such persons than those of such policy in effect
on the date hereof (or the Surviving Corporation may substitute therefor
policies, issued by reputable insurers, of at least the same coverage with
respect to matters occurring prior to the Effective Time); provided, however,
that in no event shall the Surviving Corporation be required to expend more than
an amount per year equal to 200% of current annual premiums paid by the Company,
whether expended over time or paid in a lump sum or otherwise, to maintain or
procure insurance coverage pursuant to this Section 5.7; and, provided, further,
that if the annual premiums of such insurance coverage exceed such amount, the
Surviving Corporation shall be obligated to obtain or to cause to be obtained a
policy with the greatest coverage available for a cost not exceeding such
amount.
(c) The obligations of Parent and the Surviving Corporation under
this Section 5.7 shall not be terminated or modified in such a manner as to
adversely affect the rights of any Indemnitee to whom this Section 5.7 applies
unless (x) such termination or modification is required by applicable Law or (y)
39
the affected Indemnitee shall have consented expressly in writing to such
termination or modification (it being expressly agreed that the Indemnitees to
whom this Section 5.7 applies shall be third party beneficiaries of this Section
5.7). The provisions of this Section 5.7 are (i) intended to be for the benefit
of, and shall be enforceable by, each Indemnitee, his or her heirs and his or
her representatives and (ii) in addition to, and not in substitution for, any
other rights to indemnification or contribution that any such Person may have by
contract or otherwise.
(d) In the event that Parent, the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other Person and is not the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers or conveys all or substantially
all of its properties and assets to any Person, then, and in each such case,
proper provision shall be made so that the successors and assigns of Parent and
the Surviving Corporation shall assume all of the obligations thereof set forth
in this Section 5.7.
5.8 Employee Matters.
(a) Parent shall, for a period of at least one year immediately
following the Purchase Date, cause the Company, and from and after the Effective
Date, the Surviving Corporation, and their respective subsidiaries to provide
for each employee of the Company and its subsidiaries (each, a "COMPANY
EMPLOYEE"), for so long as each such Company Employee remains employed with the
Company or any of its subsidiaries or their respective successor(s) after the
Purchase Date, with employee benefit plans, programs, contracts and arrangements
that are no less favorable, in the aggregate, than similar employee benefit
plans, programs, contracts and arrangements provided by the Company and its
subsidiaries to Company Employees immediately prior to the Purchase Date.
(b) Parent or one of its affiliates shall recognize, to the extent
credited for such purposes by the Company prior to the Closing Date, the service
of Company Employees with the Company prior to the Closing Date as service with
Parent and its affiliates in connection with any retirement plan, whether or not
tax-qualified, 401(k) savings plan, welfare benefit plans and policies
(including vacations and holiday policies) maintained by Parent or one of its
affiliates which is made available following the Closing Date by Parent or one
of its affiliates for purposes of any waiting period, vesting, participation or
eligibility to receive benefits based on years of service (but excluding benefit
accruals); provided, however, that with respect to any defined benefit pension
plan maintained by Parent or one of its affiliates in which such Company
Employee participates following the Closing Date, such service credit shall be
measured from the earliest date that such employee commenced participation in a
tax-qualified pension or savings plan maintained by the Company or one of its
affiliates.
(c) Parent shall (i) waive, or cause its insurance carriers to waive,
all limitations as to pre-existing and at-work conditions, if any, with respect
to participation and coverage requirements applicable to Company Employees under
any welfare benefit plan (as defined in Section 3(1) of ERISA) which is made
40
available to Company Employees following the Closing Date by Parent or one of
its affiliates, and (ii) provide credit, to the extent credited for such
purposes by the Company prior to the Closing Date, to Company Employees for any
co-payments, deductibles and out-of-pocket expenses paid by such employees under
the employee benefit plans, programs and arrangements of the Company and its
subsidiaries during the portion of the relevant plan year including the Closing
Date.
(d) Nothing contained in this Agreement shall be construed to prevent
the termination of employment of any individual Company Employee or, subject to
Parent's compliance with Section 5.8(a), any change in the employee benefits
available to any individual Company Employee or the amendment or termination of
any particular Employee Benefit Plan to the extent permitted by its terms as in
effect immediately prior to the Purchase Date; provided, however, that Parent
hereby agrees to cause the Company, and from and after the Effective Time, the
Surviving Corporation to honor, comply with and perform all of the respective
terms and obligations of the Company and its subsidiaries under the collective
bargaining agreements and other arrangements set forth on Section 5.8(d) of the
Company Disclosure Schedule, in each case, as in effect as of the Purchase Date.
(e) The Surviving Corporation shall, and Parent shall cause the
Surviving Corporation to, extend the date on which the Company may give notice
of termination of the salary continuation agreements listed on Section 5.8(d) of
the Company Disclosure Schedule to November 12, 2005. Parent and Purchaser
acknowledge and agree that the Board of Directors of the Company has the sole
discretion to determine the amount of the awards and the recipients under the
discretionary bonus program agreements, dated January 7, 2004, listed in Section
5.8(d) of the Company Disclosure Schedule, subject to the limitations set forth
therein.
5.9 Obligations under the Credit Agreement and the Note Agreement.
Parent agrees to cause the Company and its subsidiaries to honor and comply with
the terms and conditions of, and to perform their respective obligations under,
the Credit Agreement and the Note Agreement. In furtherance of the foregoing,
simultaneously with the first acceptance of Shares for purchase pursuant to the
Offer, Parent shall, or shall cause Purchaser to, make available to the Company
the funds necessary (i) to pay the aggregate Option Consideration in accordance
with Section 2.10, (ii) to pay for any and all amounts due and payable under
Section 7.3 or any other provision of the Note Agreement as a result of the
consummation of any of the Transactions and (iii) to pay for any and all amounts
due and payable if an Event of Default (as defined in the Credit Agreement) is
deemed to exist under Article 7 of the Credit Agreement because consents to the
Transactions by the Required Lenders (as defined in the Credit Agreement) shall
not have been obtained.
5.10 Purchase of Company Debt Prior to the Purchase Date.
Notwithstanding the provisions of any prior agreement to the contrary, including
the Confidentiality Agreement, Parent, Purchaser and any of their affiliates may
purchase all or any portion of the Company's outstanding obligations under the
41
Note Agreement, provided that, prior to any such purchase, Parent and Purchaser
shall confirm to the Company in writing that Parent and Purchaser have
irrevocably waived any unsatisfied conditions to the Offer set forth in Annex A,
other than the Minimum Condition.
ARTICLE VI - CONDITIONS TO THE MERGER
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party hereto to effect the Merger shall be
subject to the satisfaction (or waiver, if permissible under applicable Law) at
or prior to the Effective Time of the following conditions:
(a) The Stockholder Approval shall have been obtained, if and to the
extent required by applicable Law and the certificate of incorporation of the
Company, in order to consummate the Merger;
(b) No Law, injunction, judgment or ruling enacted, promulgated,
issued, entered, amended or enforced by any Governmental Entity shall be in
effect enjoining, restraining, preventing or prohibiting consummation of the
Merger or making the consummation of the Merger illegal; and
(c) Purchaser shall have purchased Shares pursuant to the Offer,
provided that this condition shall be deemed satisfied with respect to Parent
and Purchaser if Purchaser shall have failed to purchase Shares pursuant to the
Offer in breach of its obligations under this Agreement.
ARTICLE VII - TERMINATION
7.1 Termination. This Agreement may be terminated and the
Transactions abandoned at any time prior to the Effective Time, whether before
or after Stockholder Approval thereof:
(a) By the mutual written consent of the Company and Parent duly
authorized by the respective Boards of Directors of the Company (including, from
and after the Purchase Date, the Independent Director Approval contemplated by
Section 1.3) and Parent.
(b) By either of the Company or Parent:
(i) if any Governmental Entity shall have enacted,
promulgated, issued, entered, amended or enforced (A) a Law
prohibiting the Offer or the Merger or making the Offer or the Merger
illegal, or (B) an injunction, judgment, order, decree or ruling, or
taken any other action, in each case, permanently enjoining,
restraining, preventing or prohibiting the Offer or the Merger and
such injunction, judgment, order, decree or ruling or other action
shall have become final and non-appealable; provided, that the right
to terminate this Agreement under this Section 7.1(b)(i) shall not be
42
available to a party if the issuance of such final, non-appealable
injunction, judgment, order, decree or ruling was primarily due to
the failure of such party to perform any of its obligations under
this Agreement (including Section 5.3);
(ii) if the Offer shall have expired pursuant to its terms
(and not have been extended in accordance with Section 1.1 hereof)
without any Shares being purchased therein, provided, that the right
to terminate this Agreement under this Section 7.1(b)(ii) shall not
be available to any party whose failure to perform any of its
obligations under this Agreement resulted in the failure of Purchaser
to purchase Shares in the Offer; or
(iii) if no Shares shall have been purchased pursuant to
the Offer on or before the Walk-Away Date; provided, that the right
to terminate this Agreement under this Section 7.1(b)(iii) shall not
be available to any party whose failure to perform any of its
obligations under this Agreement resulted in the failure of the Offer
to be so consummated by the Walk-Away Date.
(c) By the Company:
(i) if Purchaser shall have failed to commence the Offer
on or prior to the date provided therefor in Section 1.1;
(ii) if concurrently it enters into a definitive Company
Acquisition Agreement providing for a Superior Proposal in accordance
with Section 5.2; provided, however, that the Company may only
exercise this termination right prior to the Purchase Date; and,
provided, further, that the Company makes payment of the Termination
Fee in accordance with Section 7.3; or
(iii) if (A) the representations and warranties of Parent
or Purchaser set forth in this Agreement shall not be true and
correct on and as of the date of such determination as if made on
such date (other than those representations and warranties that
address matters only as of a particular date which are true and
correct as of such date), except (x) for changes permitted by this
Agreement or (y) where all such failures to be true and correct
(without giving effect to any limitation as to "Material Adverse
Effect" set forth therein) in the aggregate would not have a Parent
Material Adverse Effect, or (B) Parent or Purchaser shall have
breached or failed in any material respect to perform or comply with
any obligation, agreement or covenant required by this Agreement to
be performed or complied with by them, which inaccuracy, breach or
failure (in each case under clauses (A) and (B)) has not been cured
within 20 business days after Parent receives from the Company
written notice of such inaccuracy, breach or failure; provided,
however, that the Company may only exercise this termination right
prior to the Purchase Date.
43
(d) By Parent:
(i) if the Board of Directors of the Company or any
committee thereof (i) shall have withdrawn or modified or publicly
proposes to withdraw or modify, in a manner adverse to Parent, its
approval or recommendation of this Agreement or any of the
Transactions, (ii) fails to recommend to the stockholders of the
Company that they accept the Offer and tender their Shares to
Purchaser pursuant thereto, or (iii) shall have recommended to the
stockholders of the Company a Takeover Proposal, or publicly proposes
to approve or recommend to the stockholders of the Company a Takeover
Proposal; provided, however, that Parent may only exercise this
termination right prior to the Purchase Date;
(ii) if the Company enters into a Company Acquisition
Agreement; or
(iii) if (A) the representations and warranties of the
Company set forth in this Agreement shall not be true and correct on
and as of the date of such determination as if made on such date
(other than those representations and warranties that address matters
only as of a particular date which are true and correct as of such
date), except (x) for changes permitted by this Agreement or (y)
where all such failures to be true and correct (without giving effect
to any limitation as to "Material Adverse Effect" set forth therein)
would not have a Company Material Adverse Effect, or (B) the Company
shall have breached or failed in any material respect to perform or
comply with any obligation, agreement or covenant required by this
Agreement to be performed or complied with by it, which inaccuracy,
breach or failure (in each case under clauses (A) and (B)) has not
been cured within 20 business days after the Company receives from
Parent written notice of such inaccuracy, breach or failure;
provided, however, that Parent may only exercise this termination
right prior to the Purchase Date.
7.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 7.1, written notice thereof shall be given to
the other party or parties, specifying the provision hereof pursuant to which
such termination is made, and this Agreement shall forthwith become null and
void (other than the provisions of the Confidentiality Agreement (subject to its
terms), Sections 7.2 and 7.3, Article VIII, the last sentence of Section 1.2(b)
and the last sentence of Section 5.5, all of which shall survive termination of
this Agreement at any time, and there shall be no liability on the part of
Parent or the Company or their respective directors, officers and affiliates,
except (i) the Company may have liability as provided in Section 7.3, and (ii)
nothing shall relieve any party from liability for fraud or any willful breach
of this Agreement. In the event of termination of this Agreement pursuant to
Section 7.1 prior to the expiration of the Offer, Parent and Purchaser will
promptly terminate the Offer upon such termination of this Agreement without the
purchase of Shares thereunder.
44
7.3 Termination Fee.
(a) Except as provided in this Section 7.3, all fees and expenses
incurred by the parties in connection with this Agreement and the Transactions
shall be borne solely and entirely by the party that incurred such fees and
expenses, irrespective of whether or not the Transactions are consummated.
(b) In the event that this Agreement is terminated:
(i) by the Company pursuant to Section 7.1(c)(ii);
(ii) by Parent pursuant to Section 7.1(d)(i); or
(iii) by Parent pursuant to Section 7.1(d)(ii),
the Company shall pay to Parent, by wire transfer of immediately
available funds to an account designated by Parent reasonably in
advance of such transmission, a non-refundable termination fee equal
to $4,000,000 in cash (the "TERMINATION FEE") on the date of any such
termination. Parent's acceptance of any sum pursuant to this Section
7.3(b) shall constitute conclusive evidence that this Agreement has
been validly terminated. The Company acknowledges that the agreements
contained in this Section 7.3(b) are an integral part of the
transactions contemplated by this Agreement, and that Parent and
Purchaser would not have entered into this Agreement without such
agreements. Accordingly, if the Company fails to promptly pay any
amounts due pursuant to this Section 7.3(b) and, in order to obtain
such payment, Parent commences a suit which results in a final,
non-appealable judgment issued by a court of competent jurisdiction
against the Company for such amounts, the Company shall pay to Parent
any costs and expenses (including reasonable attorneys' fees)
incurred in connection with such suit.
ARTICLE VIII - MISCELLANEOUS
8.1 No Survival of Representations and Warranties; etc. The
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or, except as otherwise provided in Section 7.2, upon the
termination of this Agreement pursuant to Section 7.1, as the case may be,
except that the agreements set forth in Article II and Sections 5.7 and 5.8 and
any other agreement in this Agreement which contemplates performance after the
Effective Time shall survive the Effective Time indefinitely and those set forth
in Sections 7.2 and 7.3 and this Article VIII shall survive termination
indefinitely. The Confidentiality Agreement shall (i) survive termination of
this Agreement in accordance with its terms and (ii) terminate as of the
Effective Time.
8.2 Amendment or Supplement. At any time prior to the Effective Time,
this Agreement may be amended or supplemented in any and all respects, whether
before or after approval of any of the transactions contemplated hereby by
stockholders of the Company, by written agreement of the parties hereto, by
45
action taken by their respective Boards of Directors (which in the case of the
Company after the Purchase Date shall include the Independent Director Approval
contemplated by Section 1.3); provided, however, that following approval of the
transactions contemplated hereby by stockholders of the Company there shall be
no amendment or change to the provisions hereof which by Law would require
stockholder approval without such approval.
8.3 Extension of Time, Waiver, Etc. At any time prior to the
Effective Time, any party may, subject to applicable Law, (a) waive any
inaccuracies in the representations and warranties of any other party hereto,
(b) extend the time for the performance of any of the obligations or acts of any
other party hereto or (c) waive compliance by the other party with any of the
agreements contained herein or, except as otherwise provided herein, waive any
of such party's conditions; provided, however, in the case of the Company
following the Purchase Date, the Independent Director Approval contemplated by
Section 1.3 is obtained. Notwithstanding the foregoing, no failure or delay by
the Company, Parent or Purchaser in exercising any right hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right
hereunder. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
8.4 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties except that Parent or Purchaser may assign
any of their rights, interests or obligations hereunder to any of their
affiliates or to any financial institution providing financing to pay all or a
portion of the Merger Consideration; provided, however, that any such assignment
shall not relieve Parent or Purchaser from their respective obligations
hereunder. Subject to the preceding sentence, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Any purported assignment not permitted under
this Section 8.4 shall be null and void.
8.5 Counterparts; Effectiveness. This Agreement may be executed in
two or more separate counterparts, each of which shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by the other parties hereto.
8.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement,
together with Annex A hereto, the Company Disclosure Schedule and the
Confidentiality Agreement, constitute the entire agreement, and supersede all
other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof and thereof.
This Agreement, except for the provisions of Article II and Sections 5.7 and
5.8, is not intended to and shall not confer upon any Person other than the
parties hereto any rights hereunder.
46
8.7 Governing Law; Enforcement; Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to the principles of
conflicts of laws thereof.
(b) The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, without bond or
other security being required, this being in addition to any other remedy to
which they are entitled at law or in equity.
(c) Each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (iii) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated hereby in any
court other than a Federal or State court sitting in the State of Delaware.
(d) Each of the parties hereto hereby irrevocably waives any and all
rights to trial by jury in any legal proceeding arising out of or related to
this Agreement or the transactions contemplated hereby.
8.8 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission) and shall
be given,
If to Parent or Purchaser, to:
Cerberus Capital Management, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Dev Xxxxxxx
Facsimile: 000-000-0000
47
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxx.
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx
Facsimile: 000-000-0000
If to the Company, to:
Xxxxxxxx Xxxxx, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Facsimile: 000-000-0000
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5:00 P.M. in the place of
receipt and such day is a business day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
8.9 Severability. If any term or other provision of this Agreement is
determined by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
terms, provisions and conditions of this Agreement shall nevertheless remain in
full force and effect. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable Law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
8.10 Headings. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
48
8.11 Definitions; Construction.
(a) As used in this Agreement, the following terms have the meanings
ascribed thereto below:
"AFFILIATE" shall mean, as to any Person, any other Person which,
directly or indirectly, controls, or is controlled by, or is under common
control with, such Person. For this purpose, "CONTROL" (including, with its
correlative meanings, "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of management or policies of a Person, whether through the ownership
of securities or partnership or other ownership interests, by contract or
otherwise.
"BUSINESS DAY" shall mean a day except a Saturday, a Sunday or other
day on which the SEC or banks in the City of New York are authorized or required
by Law to be closed.
"CREDIT AGREEMENT" shall mean the Credit, Security, Guaranty and
Pledge Agreement, dated as of October 1, 2002, among the Company, as Borrower,
the guarantors and lenders referred to therein and Wachovia Bank, National
Association, as Administrative Agent, Collateral Agent and Issuing Bank.
"DEBT" shall have the meaning given the term "Indebtedness" in, and
under, the Credit Agreement.
"GAAP" shall mean generally accepted accounting principles in the
United States.
"GOVERNMENTAL ENTITY" shall mean any government, court, regulatory or
administrative agency, commission or authority or other governmental
instrumentality, federal, state or local, domestic, foreign or multinational.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"KNOWLEDGE" shall mean, in the case of the Company, the actual
knowledge of the Company's officers set forth on Section 8.11 of the Company
Disclosure Schedule.
"NOTE AGREEMENT" shall mean the Note Agreement, dated as of October
1, 2002, by and among the Company and The Prudential Insurance Company of
America, Massachusetts Mutual Life Insurance Company, C.M. Life Insurance
Company, PW Willow Fund LLC, Wachovia Bank, National Association, Bank One, NA,
General Electric Capital Corporation, Xxxx Xxxxx Strategic Investments, L.P. and
Xxxx Xxxxx Strategic Investments III, L.P.
49
"PERSON" shall mean an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity, including a
Governmental Entity.
"PURCHASE DATE" shall mean the first date on which Purchaser accepts
for payment Shares tendered and not withdrawn pursuant to the Offer.
"SUBSIDIARY" when used with respect to any party, shall mean any
corporation, limited liability company, partnership, association, trust or other
entity the accounts of which would be consolidated with those of such party in
such party's consolidated financial statements if such financial statements were
prepared in accordance with GAAP, as well as any other corporation, limited
liability company, partnership, association, trust or other entity of which
securities or other ownership interests representing more than 50% of the
ordinary voting power (or, in the case of a partnership, more than 50% of the
general partnership interests) are, as of such date, owned by such party or one
or more subsidiaries of such party or by such party and one or more subsidiaries
of such party.
"TRANSACTIONS" refers collectively to this Agreement and the
transactions contemplated hereby, including the Offer and the Merger.
"WALK-AWAY DATE" shall mean the date that is 45 days after the date
on which Purchaser first mails the Offer Documents to the Company's stockholders
to tender their Shares pursuant to the Offer.
(b) The following terms are defined on the page of this Agreement set
forth after such term below:
2004 Cap Ex Plan.......................................31 Company Stockholders Meeting............................7
active subsidiary......................................14 Confidentiality Agreement..............................38
Agreement...............................................2 Covered Employee.......................................18
Antitrust Laws.........................................36 DGCL....................................................2
Balance Sheet Date.....................................17 Dissenting Shares......................................12
Bankruptcy and Equity Exception........................15 Dissenting Stockholders................................12
Certificate of Merger...................................8 Effective Time..........................................8
Certificates...........................................10 ERISA..................................................21
Closing.................................................8 ERISA Affiliate........................................22
Closing Date............................................8 Exchange Act............................................3
Code...................................................12 Foreign Antitrust Laws.................................16
Company.................................................2 fully-diluted basis.....................................3
Company Acquisition Agreement..........................34 Guarantor...............................................2
Company Charter Documents..............................13 Indemnitees............................................38
Company Common Stock....................................2 Independent Director Approval...........................7
Company Disclosure Schedule............................13 Independent Directors...................................6
Company Employee.......................................40 Laws...................................................19
Company Material Adverse Effect........................13 Material Adverse Effect................................13
50
Merger..................................................2 Schedule TO.............................................4
Merger Consideration....................................9 SEC ....................................................3
Minimum Condition.......................................3 SEC Documents..........................................17
Non-U.S. Benefit Plan..................................22 Securities Act.........................................14
Offer...................................................2 Share...................................................2
Offer Documents.........................................4 Stock Plans............................................13
Offer Price.............................................2 Stockholder Approval...................................15
Option.................................................12 Stockholder Support Agreements..........................2
Option Consideration...................................13 Superior Proposal......................................35
Parent..................................................2 Surviving Corporation...................................8
Parent Material Adverse Effect.........................28 Takeover Proposal......................................34
Paying Agent...........................................10 Tax Returns............................................21
Permits................................................19 Taxes..................................................21
Proxy Statement.........................................7 Termination Fee........................................45
Purchaser...............................................2 U.S. Benefit Plan......................................21
Schedule 14D-9..........................................5 U.S. Pension Plan......................................21
(c) As used in this Agreement, "INCLUDING" shall mean "including,
without limitation."
(d) The parties hereto have participated jointly in the negotiation
and drafting of this Agreement and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as jointly
drafted by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.
[signature page follows]
51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
GMI HOLDING CORPORATION
By: /s/ Xxxx Xxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxx
Title: President
GMI MERGER CORPORATION
By: /s/ Xxxx Xxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxx
Title: President
XXXXXXXX XXXXX, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
ANNEX A
-------
Conditions to the Offer
-----------------------
The capitalized terms used in this Annex A have the meanings set
forth in the attached Agreement, except that the term the "AGREEMENT" shall be
deemed to refer to the attached Agreement.
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and (subject to the provisions of the Agreement) may
terminate the Offer and not accept for payment any tendered shares if (i) the
Minimum Condition shall not have been satisfied at the expiration of the Offer,
or (ii) immediately prior to the expiration of the Offer, any of the following
conditions shall exist:
(a) there shall be any injunction, judgment, ruling, order or decree
instituted, issued or entered, or any Law enacted, issued, promulgated, amended
or enforced, by any Governmental Entity, which restrains, enjoins, prohibits or
makes illegal the consummation of the Offer or the Merger, except where the same
are consistent with Parent's obligations under Section 5.3 of the Agreement;
(b) (A) the representations and warranties of the Company set forth
in the Agreement shall not be true and correct at and as of the expiration of
the Offer as if made on such date (other than those representations and
warranties that address matters only as of a particular date which are true and
correct as of such date), except (1) for changes permitted by the Agreement or
(2) where all such failures to be true and correct (without giving effect to any
limitation as to "Material Adverse Effect" set forth therein) in the aggregate
would not have a Company Material Adverse Effect, or (B) the Company shall have
breached or failed in any material respect to perform or comply with any
obligation, agreement or covenant required by the Agreement to be performed or
complied with by it prior to the expiration of the Offer;
(c) the Agreement shall have been terminated in accordance with its
terms;
(d) since the date of the Merger Agreement, there shall have been any
Company Material Adverse Effect; or
(e) a moratorium on lending by banks shall have been declared by any
New York or United States Governmental Entity.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be asserted by either of them regardless of the circumstances
giving rise to such conditions or may be waived by Parent or Purchaser, in whole
or in part at any time and from time to time in the sole discretion of Parent or
Purchaser (except for any conditions which, pursuant to Section 1.1 of the
Agreement, may only be waived with the Company's consent). The failure by Parent
or Purchaser at any time to exercise any of the foregoing rights will not be
deemed a waiver of any right, the waiver of such right with respect to any
particular facts or circumstances shall not be deemed a waiver with respect to
any other facts or circumstances, and each right will be deemed an ongoing right
which may be asserted at any time and from time to time.
If the Offer is terminated, all tendered Shares not theretofore
accepted for payment shall forthwith be returned to the tendering stockholders.
A-2